It's sad, but I don't think anyone should be surprised. Google is a mega corporation, no matter how nice they may seem to be. They've got to deal with legal issues, stock holders, the government, and everything else that a big corporation does. While Google does tend to be a good company, nobody should be surprised to find Google isn't their friend.
Except that excuse is pretty much crap. A web browser is a vehicle. Ford doesn't take heat when someone uses it to transport drugs or as a getaway car. It's one thing for Google to not show search results because the results are for illegal content, but another to limit their browser because someone might use it for something illegal. Take away my computer too because that's what bankers use to embezzle and what hackers use to hack.
I don't disagree, I was just trying to explain Google's reasoning behind it and the reasons they'll say, and just get people to remember that big corporations are not their friends. Google would never be forced to legally do what they did, but they'll happily do it because they're not the users' friend, they're friends with the people with power and money.