Forum Moderators: open
If there's no DHTML on the page that can switch the visibility of that content, then it is clearly against the guidelines for many search engines. It is hidden text, just as much as white text on a white background would be.
However, your observation is correct, there's a good bit of this out there and in many cases it doesn't seem to automatically catch a penalty. It sure shouldn't survive a manual check, however.
However, IMO it's just not worth getting wound up about -- not in either direction.
1. If you go overboard copying this technique, you may not get the advantage you think you will, and some day or other it can all blow up on you.
2. If you think this technique is what is actually CAUSING the high ranking of some webste, you may be wrong about that, too. There are too many elements in today's search engine algorithms to think that hidden text is doing all the "heavy lifting" for a well ranked site.
Here the way I approach it -- if the keywords are relevant and would bring in targeted traffic, then why bother hiding them with css or any other method? Seeing the words that I searched on helps keep me on the page.
Plus openness and integrity are more likely to get visitors to trust using your services...