I had a short mail exchange with Matt, he confirmed me that the methods in itself does NOT breach any of Google guides lines.

I asked him:
“I understand that you cannot reveal the algorithms of anti spam but still I’m very interested to understand how any search engines (that cannot understand dynamic driven content) can know if ‘stuffed keywords’ are used or not.”

He answered:

If we load a page and it’s got a ton of rare, misspelled, or unusual variants on a single word or phrase, that can be a pretty good signal. The only point I wanted to make is that there are ways to show Flash on a page that has text content that search engines can index. Google’s main litmus test for cloaking is whether the page that the user saw is the same that Googlebot saw. The easiest test is whether the md5 sum of the two pages are the same. Even if the hashes are identical though, it’s possible that someone is hiding keyword-stuffed text behind an image or Flash. That’s where the keyword stuffing detection comes in. In addition to high keyword density, you could imagine looking at the words in sequence and seeing that those sequences are quite unusual compared to “normal” text that we see around the rest of the web.

Now obviously doing an MD5 on vectorized texts can be resources consuming. So I assume that if the exposed texts you have does not seems to be too SEO oriented (typically high keyword density) then you should be safe.

P.S: That was a year ago, do things may have a changed and I must admit that I haven’t been watching at this particular issue too much.

Cheers,
Ahmet

I note the “Matt Cutts” comment and a quick look at Google’s webmaster guidelines (not complete here – check the full version at Google) seems to suggest that the method indicated is already ba breach of Google’s own guidelines.

Quality guidelines – basic principles

* Make pages primarily for users, not for search engines. Don’t deceive your users or present different content to search engines than you display to users, which is commonly referred to as “cloaking.”

* Avoid tricks intended to improve search engine rankings. A good rule of thumb is whether you’d feel comfortable explaining what you’ve done to a website that competes with you. Another useful test is to ask, “Does this help my users? Would I do this if search engines didn’t exist?”

Quality guidelines – specific guidelines

* Avoid hidden text or hidden links.

* Don’t use cloaking or sneaky redirects.

* Don’t load pages with irrelevant keywords.

* Don’t create multiple pages, subdomains, or domains with substantially duplicate content.

I would be very interested to see the sites using XSL (and not indexed). We need to understand that in the case of flexdirectory.com the good ranking come from the popularity of Ted Patrick’s blog.
Being well indexed and being well ranked is another story :)

By the way, schematic.com doesn’t use the XSL…

About the pudding it is in the fact that you can have the same information layer with two formating (users vs search engine) :D