Sorry it took a few days to reply to this. Too busy writing code...
With regards to the argument that describes the resources required for customer support even to a small percentage of your audience I can only say this: It's your chosen business model. I am paraphrasing one of my favorite answers when someone complains about their job ("It's your chosen profession").
The point is that Google's business is about doing what it does for a huge number of people. If supporting them is overwhelming either get out of that business or figure out how to do it correctly. I can't really accept the "it's too many people" argument as a valid reason for not doing it well or for applying the "criminal algorithm" to everyone.
There's a side thread there that says that "providing information about how the abuse was flagged would help spammers quite a bit". While true, I, again, find myself not agreeing with the idea of punishing legitimate customers for this reason. I would like to think that the vast majority of Google customers fall under the "legitimate" category. If spammers get better because you are providing detail flagging information you will simply have to get better at detecting and blocking spammers. This would trigger an evolutionary phase which, at some point, should make it very difficult for a spammer to game the system, even with "full source" if you will. Much like security algorithms become more secure if the source is released and is tested with full knowledge of the internals, yours should do the same.
Conversely, honest and legitimate customers would gain the huge benefit of now understanding how to behave or how to do things and why a certain approach might not do well in Google's ecosystem.
One of the most frustrating things I have seen is someone full of drive to launch an internet business only to be shot down by a Google shutdown. And, when no reason or actionable information for the punishment is given this entrepreneur simply had to throw their hands up and give up on that tack. Needless to say, their next attempt ignored Google products completely and they are doing OK. My guess is that they could have done very well and much grief could have been prevented had Google said: "Your site has the following problems ..." and then, rather than cut them off schedule them for a review in, say, thirty days (or variable length based on the seriousness of the issue). That would have been far more civilized and far more conducive to helping your community grow and evolve in the right direction.
New and inexperienced internet entrepreneurs (and some experienced ones) need a way to learn how to behave. What works and what does not. What is acceptable and what isn't. It is only reasonable to assume that they will make many mistakes in their zeal to get an idea off the ground. Penalizing them with a permanent hammer blow to the head is not conducive to growing better netizens. Guiding them with actionable feedback is.
The current process can only be characterized as violent. From the perspective of an honest business person it is tantamount to getting hit with a bullet while walking your dog. The reasons could have been many. Maybe the shooter objected to your walking your dog in front of their home. Had the shooter at least attempted to communicate with the dog-walker it is far more likely that violence could have been averted.
Above all, if your "Do no evil" is sincere, then you have to change the way this works right away. The way this hits honest entrepreneurs is nothing less than pure evil. Again, you take a bullet and you don't know why.
I do appreciate your visibility here in HN. In the past I have simply given up trying to raise these and other points with anyone at Google that might remotely have the ability to at least elevate the conversation internally. I hope you might be that person. I mean all of the above in the vein of constructive criticism. We all want to see the ecosystem becoming more conducive to the exploration of new ideas. Google, at this time, has taken a rather totalitarian position of being the "moral authority", if you will. With that, and so long as you want to be a benevolent dictator, I think, you inherit the responsibility to not cause harm through your actions.
Having said that, until things change I have no choice but to treat your offerings as something that one simply cannot rely on to build a business. The "Google love" can disappear from your site overnight and you'll have no practical way to fix it. That's not a business, that's going to Vegas.