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*Google delivers highly targeted and relevant results, but beyond that we offer GoogleScout, a revolutionary concept for locating groups of information sources on the World Wide Web. GoogleScout helps user surf the web smarter, faster, and easier.*
They seemed quite proud of it at the time, maybe the quality of the normal SERPs also took them by surprise, and made the need for Googlescout redundant?
*A GoogleScout link is created from the collective wisdom of the web. It delivers suggested websites that are based on an objective and fully automated analysis of web pages and overall link patterns of the web.*
Wouldn't this statement imply they expected the majority of links to be relevant?
similar pages
This feature does work, but is mis-named. It seems to return "similar websites". In other words, it looks at the total theme of the website, and returns the home page of other sites with a similar theme. The content of the page is ignored.
For example a page on a global travel review site, mentioning nice hotels in widgetland, will for "similar pages" give the home page of other travel review sites. Even if they have nothing on widgetland.
It also seems to take into account common ownership of sites (or maybe just crosslinks).