I can confirm everything that was said in that article. I run a free dynamic dns service (freemyip.com) and every time someone creates a subdomain that later hosts some questionable material, Google will immediately block my whole domain. Their response time for clearing these up varies from a few hours to two weeks. It feels completely random. I once had a malicious subdomain that I removed within two hours, yet the ban on Google lasted for more than two weeks. Now, this is a free service so bans like these don’t really matter that much to me, but if it was a business, I would have most likely gone bankrupt already.
I noticed that recently, they are only sending me the warning, but don’t block me right away. Perhaps after a few years of these situations I advanced to a more “trusted” level at Google where they give me some time to react before they pull the plug on my domain. I don’t know. But I would be truly petrified of Google if this was my real business.