"If digg wants to use their own batch of sockpuppets to influence the front page to their partners benefits they are free to do so, the responsibility, the upsides and the downsides are all theirs to take home."

The downside is that someone identifies and calls them on it, which is purportedly what is happening here (though the analysis and conclusions are flawed, in my opinion). I'm not sure what you're getting at.

"This is like saying google is 'gaming' the search results by having their people influence the rankings / search result pages by changing things in a way that benefits google."

But....people do that sort of analysis of the search engines all the time, trying to find patterns where it betrays user trust for selfish reasons. Search engines tread a dangerous realm where they can lose user trust (and usage) if they abuse their position.

"Bottom line is it is their site, and they can run it any way they want to"

I don't know why, but this sort of comment always bothers me.

Yes, we all know it's their site and they can do what they want. It's also the attention and trust of the community, and they can do what they want, including choosing to move on, distrust, question, etc.