As much as many of us involved in New Marketing would like to think that the web is a self-policing system, it is still a system that can be gamed. From someone at my office (via Digg itself), an account of buying Diggs and creating popularity with money.
I can tell you exactly how a pointless blog full of poorly written, incoherent commentary made it to the front page on Digg. I paid people to do it. What's more, my bought votes lured honest Diggers to vote for it too. All told, I wound up with a "popular" story that earned 124 diggs -- more than half of them unpaid. I also had 29 (unpaid) comments, 12 of which were positive.
It's interesting to note that while the writer was initially able to game the system, it did - eventually - begin policing itself to the point where the story was buried (see page 2 of the article.)
I'm undecided if that's simply because she didn't pay for enough Diggs, and all the Diggs she paid for happened at the same time, or because the community really is self-policing. What I do know is that even if a story like that were eventually buried, it would only take a couple of hours of it being "popular" before it started showing up everywhere. I don't see this as a flaw in Digg's system (which, let's be fair, is flawed.) It's a flaw in the blogosphere than many bloggers - and commentors - simply don't bother to check their facts. It's the same philosophy that lands emails with the subject line "FW: FW: FW: FW: FW: BILL GATES WILL PAY U $1 FOR EACH PERSON U SEND THIS 2" in my inbox every now and again.
But outlets like Digg make it worse, because bloggers assume that Digg's (clearly flawed) technology is safeguarded against these kinds of efforts - so there's a basic level of trust inherent in linking to stories from Digg.
Oddly enough, there are many in the blogosphere who view their work as more "pure," simply because they're not dealing with traditional PR and marketing/advertising-influenced publications (like newspapers, etc.) And yet samples like this show that a minimal investment - far less than sending a single press kit to the New York Times, and following it up to get it noticed - show that it may be even easier for New Marketers without scruples to manipulate the system. I could cite another instance I know of (where it was done TO us, rather than BY us), but I'm not sure if I'd be breaking confidentiality, so I won't.
But this kind of thing is sadly more common that you might imagine.