A Google Groups thread points to a serious concern first brought up at WebmasterWorld where proxy hijacking has become a lot more prevalent. As you can see, Barry reported on this last week.
Adam Lasnik writes in to shed some light on the matter. He writes:
Trying to whack every single new proxy is a losing proposition.One thing we do have a strong interest in keeping an eye on is situations in which proxies outrank the original sites for reasonable query terms.
In the event that this occurs, I assume that the best way to proceed is to fill out a Google Spam Report.
Forum discussion continues at Google Groups.