I do agree with you mostly, and in general I think that censorship is hardly ever good. In this particular case censorship was a force for good.
As an aside, Google was running 'used aborigines' adverts from ebay for quite a while. Do you think these adverts should also be allowed to run?
Australian society mostly takes a very dim view of racism, and especially racism towards the aborigines. Our elected representatives and the people of australia put in place laws such that this type of thing does not happen.
However the government and politicians did not make this particular case of censorship happen - the courts of law made it happen. I think most of society agree that it is a shit thing that google was doing in this instance.
Google has in place limits to stop things like pornography showing up, with it's safe search feature. This is already a form of censorship based on the values of countries like the USA.
Where do we draw the line? Obviously sociopaths shouldn't be able to say whatever they like to millions of people if their words will cause harm. How about spammers bent on selling their products? Google already blocks some of the spammers. As do they block malware serving sites, and sites that don't play by googles rules of what constitutes a good web page. Make a website more google friendly, and google will reward you with higher rankings. Put more google messages (adverts) on your pages, and get more people to see them, and google will pay you more money. How about companies abusing trademarks or abusing copyright? Are those censorship too?
Do we take the values of a multi national corporations(ie google)? Isn't that a form of cultural imperialism? What is to stop the courts abusing their power? There are many processes in place to try and let all sides of society have their input into what the courts do. What is to stop google from abusing their power and imposing their views on people who do not want them? ... glibly, I guess the answer to that is adblock.
I don't think you can have a 'censorship is always wrong' approach, or a 'totally abusing censorship in terrible ways' approach either. Reasoned arguments by courts of law are an answer - to find out where censorship is appropriate and where it is not.
The people who made that site should get a dog up em.