Sure. I agree with everything you say. They have good reason to want their page rank measurement to be accurate. But they are not allowed to do whatever they want to achieve this.
I think Google is allowed to remove sites from their index. Is that what you mean by 'whatever they want'?
I'm going to parody. Can they threaten to remove sites from their index if you don't write "I love Google" on the top of every webpage? Can they threaten to remove your site if you do not ban the bingbot? I think we would agree that would be abuse of power.
If they want to remove sites from their index because those sites are no good for their index, etc. ..Fine. But, if they remove sites for reasons other than 'We don't want these sites in the index or in the SERPS,' that is a problem. In this case, I am arguing that they don't want to remove those sites from their index. They want those sites to comply with their nofollow policies. I don't even have much a problem with these policies. I have a problem with Google being able to set policies and enforce them directly with the threat of removal from the index. It is almost equivalent to the threat of removal from the web entirely due to the way people use the internet and Google's role in that. Many sites get more traffic from searchers Googling the name of a site then direct traffic.
If they don't survive, it will not be because of damage to their quality, but because of an outcry. There would be in outcry in that case because it is bad and obviously.
There is not a perfect marriage between what is good for Google and what is good for the world.
I think Google is allowed to remove sites from their index. Is that what you mean by 'whatever they want'?