Google has taken action on Mahalo before and has removed plenty of pages from Mahalo that violated our guidelines in the past. Just because we tend not to discuss specific companies doesn't mean that we've given them any sort of free pass.
For an example (which was submitted as search feedback a month ago), try searching for "XMPP load balancing" and look at the third organic link.
(Edit: actually, in that case it appears they're using JavaScript to hide the indexed content. Same effect, however: the cache link shows the "solution" but clicking the search result displays an ad.)
The indexed content is blurred out and there's a big ad overlaying it, with no close button or other method to display the content, other than the Google cache link.
Clicking the link again shows the additional content at the bottom of the page as you described. So there's some other algorithm at play.
Short version is: they used to, and got busted for, serving answers to the spiders and ads and pitches to the surfers. So now they show the answer at the bottom of a pile of ads and pitches.
But they still suck. Horribly. And are the number one example I hear when people say "I wish Google would let me blacklist domains".
Edit: Even a GM script to remove all the leading spammy divs would do...
On Chrome you have Search Engine Blacklist https://chrome.google.com/extensions/detail/jiicbcimbjppjbck...
On Firefox you can use the filter option of Optimize Google https://addons.mozilla.org/en-US/firefox/addon/optimizegoogl...
Do you consider that site to be a quality & non-spam source of information?
If they're serious about their standards, they would remove Mahalo en masse from their index.
edit: Or, to satisfy lukev, they can keep the index as-is but make sure Mahalo pages never rank high in results.
The question is one of rankings. The only time there is a problem is when a spammy site ranks above a more relevant site for a particular search. If I enter a very specific query that only hits a spammy site, then I should see the spammy site, because it's there. Google is a search index, not a "visitors guide to the internet."