Squealing on other webmasters

When does it get nasty?

[yosmc]

When I search for a keyword I am competing for, I can see that the top 5 sites are not playing by the rules. Four of them obviously show prepared contents to GoogleBot and randimize their page for all other users so Google can't tell that they're getting a special package ("Archive" is turned off, of course). The fifth one is simply using hidden text.

Now of course I could come running to Mama Google and cry because these boys have been bad. Hopefully, Mama will punish them! On the other hand, I have the feeling that it's slightly unethical for a webmaster to turn other webmasters in. It's kinda like the law of the sandpit: Sure, that other kid hit you with his shovel, but running to Mama is pretty uncool.

Has any of you guys got experience with such a situation? Should I report my findings to Google, or should I try to get all my webmasterly skills together and beat my competitors anyway? The problem I see is that I have already been sitting there and doing dull stuff like squeezing my favorite keyword into the text another three or four times, and I fear that by trying to beat people who don't care for the rules, I'll finally end up breaking the rules myself.

Any thoughts?

[Powdork]

Picture my site is number 5 and number four is a used domain that was thrown away (failed dot com) that only has three outgoing links to two vacation rental properties (there is abosloutely nothing else on the page). Its only two incoming links are from DMOZ and Google directories (PR 6 and 7) for a computer category. The site at number one for this search has only one external backlink, coming from the site at #4. Site #1 is a quality site.
Here is my dilemna. In my opinion, the site at #4 is a no brainer, they are obviously now using their domain as a way to sell the pr they are receiving from their never removed dmoz listings. But site #1 is a quality site (actually a potential client for my directory) so I don't really want to report them. I don't care if they lose the pr coming from reporting #4. I would feel bad if they are related to site #4 and get banned.
I reported the site #4 through the dmoz abuse report so the old domain would be removed from both directories without affecting site #1 which will lose pr that I will happily replace along with some content.
Of course, by the time dmoz removes it, makes a new dump available, and Google updates that, the web may be a thing of the past;)