Why not allow individual users to hide sites from their own search results and save the info in their google account? For example, provide a "hide this site from my results" link next to each result. Each person decides which site they don't want to see and SEO and global results remain unaffected.
If you clicked it, that result wouldn't appear for you again. I used it all the time.
Then, lately it's gone. Maybe I was part of a small, randomly-selected test group?
That experiment was replaced by Google "Stars" in March 2010 because, according to Google:
> In our testing, we learned that people really liked the idea of marking a website for future reference, but they didn't like changing the order of Google's organic search results.
http://googleblog.blogspot.com/2010/03/stars-make-search-mor...
I personally think there is much more going on here than Google admits.