Everyone treats Google like this super police agent who's job is to keep our minds free from digital pollution. Yet 97% of Google's income comes from their ad network, which thrives on having publishers and SERP pages to serve up their advertising customer's creatives. Ultimately, I'm sure Google is fine with this Mahalo stuff, because it means they have more ad space to publish on.
What Mahalo has going on is not much different than the major article directory sites like EZine and Associated Content. Search on one of those sites for corn on the cob and I bet you'll find a bunch of similar articles, all plastered with adsense. In fact, I have tools right now that can rewrite an article and allow me submit more corn on the cob articles in under a minute. But you never hear anyone bitch about those sites, because it's User Generated Content. Ultimately, how are they any different?
Honestly, knowing what I know about Black Hat SEO Tactics (I know a good amount), I'd rather see someone building out massive crappy content sites than spamming their backlinks everywhere. At least they aren't polluting everyone else's sites by getting XRumer blasts and Blog Comment Spamming.