[trilljester]

Here's what Google wrote back to me:

Thank you for your note. We recognize your concern. Please be advised that
we don't personally review individual sites, nor do we comment on
webmaster techniques or the details of our search technology beyond what
appears on our site.

We've dedicated an entire section of our site to answering the most common
questions from those who maintain and/or promote websites. You'll find all
of our publicly available information information posted at
http://www.google.com/webmasters/index.html

I did some more research on their site, and nowhere in Google's definitions does this qualify as a "bad" practice. However, it could be loosely, and I mean, very loosely defined as cloaking, in the sense that 2 sets of content are being presented. However, you are not hiding content from anyone.

There are a lot of websites out on the net that require you to register or even pay to see content. Yet, they're indexed and served in Google. If this was a rampant violation of their terms of service, then they'd clearly state it. Again, it's your choic to use this mod or not. If you are extremely worried, then don't use it. Simple as that!

Onwards:

Amazing! Any plans to have them show as users on the memberlist like GoogleBot and YahooSlurp?

Well, on my site, when Googlebot shows up, it displays them as their true identity on the Who's Online display. It's probably not a good idea to make them actual members, they're just borrowing the members' group.