Hi Shannon, I dont think I have had to reply to you before this Cleaning up our own industry is one thing, but many of these sites using these techniques are not done by SEO's, but by webmasters who read an article which sounded good on an abuse of a technique, and they did not know better or just did not care. I said "many", before anyone jumps on that. Reporting people because they compete with you is not regulating the SEO industry. It is cleaning the search engines listings but using your point of view only. That is the search engines job as Bob pointed out, not ours. If the SE's want clean listings, then they should damn well get off their collective butt's and clean them.
"However, cloaking and any other form of SEO that is being abused can still be beaten the proper way. Assuming you are a real SEO." Agreed.
The issue here is how does the web page make the links visible to the visitor not SE. If there is no means (i.e. javaScript event-OnHover, etc.), then they are breaking the rules like everyone else. Google would see this as what? I do not agree that you should report them. The use of <style> or <noscript> are proper programming commands that are allowed. This is just a beginner mistake and is not major. If this was real, you would never have seen it. In addition, the use you have described is the foundation of a CSS navigation system that is widely used.
Google does not have to parse CSS, the spider just ignore it and this type of "spam" is visible very quickly. But again, this is minor and they would not waste their time. If you want to have fun with some site, copy the HTML and delete the CSS file link. The games become visible.