In any case, the “donate by linking” page is quite new. The domain move disaster was months old by the time I first published it.
[1] http://searchenginewatch.com/sew/news/2321516/rap-genius-no-...
It's not very clear what sort of asking is permitted, but I'm pretty sure that the sort of asking that Paul Ingraham is doing is not ok. He's specifically asking people to create links in a way that is unnatural.
But big websites that aren't ad driven use paid links to fund the site. We were paying big sites (think three letter domain names, top five newspaper sites, etc) for links. Say a paper writes an article on car insurance - wouldn't it be nice if they linked to our customers site and 'forgot' to mention a big competitor. Money will make that happen.
So how can google punish these big sites? They are put in an impossible situation.