If they don't get the issue of Knol pagerank sorted out soon, they are going to be hit with a massive anti trust lawsuit. And they are going to lose. I'm curious as to why everyone is so surprised that this is happening though. It already worked like this with blogs hosted through Blogspot and websites hosted through Google Pages.
I certainly hope not. Google, as a private company, should be free to display whatever they want in the search results. Once we start litigating and mandating search placement it becomes a no-win situation. If site A is placed above site B, site B sues. If site B is above site A, site A sues.