Excellent post, you have echoed my sentiments, wrap this up in the post 9/11 war on terror and the hobby of photography becomes a crime in the average persons eyes.
I also agree with your analysis. The daft logic logic of Mike Arrington's postion is that companies should not do business in countries that don't have American values. Here in Korea you can be sued for liable by printing the truth about someone because it can ruin their reputation and South Korea is always ahead of the USA in the annual freedom of the press poll put together by Reporters without Frontiers. I guess if you want to bash Google their "Do know Evil" mantra is a very useful stick.