Then couldn't Google offer some sort of non-personalized version where such data was discarded that privacy conscious users could choose to use? This would bring me back to believing that Google isn't "evil"

Well, it puts an end to certain types of programmes that use loan histories. For example, some libraries allow people to check their personal loan histories. This is useful if you've ever dug deeply into a given subject at a library, and would like to check what you've read already. Another example is the use of loan histories to generate lists of recommended material. So there is a cost, but I think it's a cost that librarians were willing to pay to protect people's privacy.

I see your point though, the costs to Google and their users is higher.