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Today I see big changes in search with "Moderate filter on" and I can say its to the way better, I have made my usual searches with some keywords which can not be mistaken as adults searches and some which could be mistaken both search gave me good results with more images presented, so as it seems now we are on a good way, but sometimes they make a few changes to the filter, so we have to wait a few days, but for now it looks good.
There's a new interview online with Peter Linsley [stonetemple.com], the product manager for Google Image Search. He covers a lot of territory in a very top-down view, but it's interesting to extrapolate from what is in print here.
There are even some hints about optimizing for image search (repeat the information in an alt attribute somewhere in the text content of the page) and the fact that Image Search "inherits" a lot of the regular spam team's work.
Now to the update, I still see more and more images and no bad once, so still just good things to say.