I was then told by the recruiter that "it would be unfortunate" if I had to abandon the recruiting process because I'd gotten another job offer. I said, "unfortunate for whom? Certainly not for me."
The last straw was when I found out that you don't get to meet your manager before you accept the job, or do know exactly what you'd be doing; and that was a deal killer. Your manager IS your job or certainly your happiness in it. I walked away, and have never been happier about that decision.
You say that, yet they consistently field top talent in the industry. The fact is that all hiring is dysfunctional and imperfect in some way. Google's is less so than most everyone else's.
I think that at the end of the day, people don't like being rejected. That's understandable, but it's going to add some biased memes into the public consciousness that you have to mentally discount to a degree. I focus on the results they have.
Of course I didn't like not being accepted (that was in 2007 btw).
But based on what now is showing and the opinion of people that have worked there (and the jobs I had afterwards) I see that it didn't matter much in the end, and I believe that even though having Google in your CV is something that's good, not entering allowed me to pursue a lot of other things.
And the opinion that the Google selection process (not only theirs) is dysfunctional is widely shared.