It seems pretty counterproductive for Google to penalize the linked-to website for this, because they don't necessarily have any control over the links. This means that now a good strategy would be to make a bunch of spam links to your competitors' websites and have their rankings go down through no fault of their own. While that would be less effective than having your own go up, it's still useful.

What Google should do is make the links have no effect at all, thus preventing this abuse.