PS. This is a real question, not a "you should do it" post. I assume someone would already give it a go by now.
To do the same for mattcutts.com you would have to build hundreds of millions spam backlinks to "outspam" his millions of legitimate backlinks. This is nontrivial.
So the people at the mercy of Negative SEO are the people least equipped to defend themselves: small hobby site owners, webmasters with personal blogs, small businesses etc. You can easily knock out their sites from the SERPs and they would never know what happened. Larger sites are secure due to the nature of their large link profiles.
Personally I think all the fear over Negative SEO has been overblown. I've personally been able to knock sites out of the SERPs for a year or so, and so have many other blackhatters. However, people would much rather spend their precious time and resources improving their own sites to get to the top of the SERPs rather than knocking out the competition.
I don't think Negative SEO is ok. But I also don't think it's a big deal.
There's a filter you've missed there - those people are only at the mercy of negative SEO when they stand in the way of an SEO practitioner and financial gain.
In practice this is almost never. If you're SEOing in a small niche it's very easy to simply outrank the competition if you know what you're doing. It would take many more resources to knock out the dozen of sites in the SERPs above you, and even if you did it's not guaranteed that your own site would replace them.
The only time you would want to knock out your competition with negative SEO is if you're hovering around 5-10 on a high value high volume keyword, but in the real world sites that rank for those kinds of keywords have millions of legitimate backlinks, and it's next to impossible to negative SEO them.
So personally I've never seen a situation in which the time and resources expended in negative SEO would be justified. Even for reputation management it makes sense to rank dozens of your own sites rather than knock out all the "bad" competing site.
Is this really true? I struggle to imagine how generating legitimate and high-value backlinks is easy, even for a small niche.
The more negative SEO that happens, the more data that gives Google. Overtime, the negative SEO sources will be over-saturated, offering no benefit for either positive or negative SEO.
Driving down the positive and negative value of links makes all SEO link building efforts consequently worthless. Which in turns increases the importance of other ranking factors.
This is a natural evolution, in tiny tiny steps Google is nudging people into playing it's game - producing websites that have content. SEOers are slowly falling into line building private link networks, paying people to write content, afraid to spin/rehash existing content because it might leave a fingerprint Google can detect.
It's fascinating watching.
People do have emotions and act on them from time to time. I don't think it requires any assumptions about Cutts's ambitions, but rather about how much effort it would take an annoyed spammer/black-hat to point some of their tools at the highly visible source of their frustrations.
Driving down the positive and negative value of links makes all SEO link building efforts consequently worthless. Which in turns increases the importance of other ranking factors.
You have a highly optimistic take on this. I think history generally shows that staying one step ahead of criminals/spammers/up-to-no-gooders is a never-ending struggle that does not tend towards positive resolution.
What "other ranking factors?" If you knew what those were, or even knew for sure they existed, the SEOs would too and they would be exploiting them. It's an entire industry whose sole purpose is to understand and game Google's rankings, and just as all this fuss about negative SEO shows, they're not losing.
highly visible only in SEO circles. The rest of the world could hardly care less. It certainly wouldn't make any mainstream news bulletin.
"I think history generally shows that staying one step ahead of criminals/spammers/up-to-no-gooders is a never-ending struggle that does not tend towards positive resolution."
Google are not one step ahead, they are always one step behind, reacting to the next thing. One step ahead is dealing with a problem before it even becomes a problem - in chess they call it prophylaxis - defending before you need to defend.
History generally shows bad things prevailing by people sitting back and doing nothing.
What Google have done with spammy link penalties is to change the game SEOers are playing. It's a classic advice of if you can't win this game, change the game. (Similar to Honduras' World Cup football efforts: if you can't beat 11 men, beat 10).