Google bans IPs and domains when they are sure that the automated queries were sent by the domain owner and/or the SEO firm involved. You can't harm your competition with WPG and similar tools.
Not bothering with small offenders is a matter of common sense. First, it's not worth the efforts for Google. Although it's automated, it takes machine time, storage and maintenance. Second, spoofing client info makes no sense when you only send a handful of queries every once in a while. They may or may not log these activities, but they don't act currently. As soon as you touch the threshold, chances are pretty good they'll catch you, regardless whether you're spoofing or not. As a Googler, I'd have more fun tracking down high sophisticated TOS violations by the way.
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