I don't know enough about SEO to answer this question so maybe you guys can do this for me. Let's say you were #1 for a highly competitive keyword and your competitors want you out of the way. Is there something they can do to your backlinks, etc. to make your website rank lower for that keyword? You hear about a lot of people clicking on their competition's ads in sponsored results to get them out of the way so you would think there would be people out there trying to do something to their competition in the main search results.
yes, it is possible, one way is hacking into your Web site account and putting in invisible code that still ranks for other related keywords. Another way is other SEOs look for sites who are involved in black hat SEO and immediately report them to Matt Cuts @ google.com. Not many people will bomb your site to get you off the list because it takes too much effort, they most likely can rank higher than you if they gave half the effort in white hat SEO.
Well, there is speculation that you can make your opponents lose their rankings by buying them a crapload of links from viagra/porn/gambling sites - it's called Googlebowling. Google officially denies that your competitors can adversely affect your rankings, but there have been a few reported cases where it apparently has happened. It often takes months along with thousands of dollars, so it's generally not viable for most people.
No, it can be done overnight (while you sleep) with a tool which i won't name. It can happen and it's a very real threat now Google are penalizing people for incoming links.