I am going to have to take the opposite view here - nothing unethical was happening.
Danny says his designer was not versed in SEO - but I'll bet (s)he knew about accessibility!
Putting text in an element and then using image replacement to make it pretty is a standard accessability technique - when I do it I normally name the class something blatant like 'accessabilityonly', but that only makes it clearer, it isn't the toggle to make it fine.

Yes, it can be abused, but that doesn't mean that you should assume it is abuse.

For instance - rather than have a series of 'read more' links down the page after a series of article previews, you should have <a href="...">Read More<span> about {the name of the article}<span><a> after each, and then use css *exactly as shown on searchengineland* to hide the spanned text... position: absolute & left: -10000px.

Basically, yes, this stuff is open to abuse, but if you do it responsibly and offer alternate text of, oh, I don't know - perhaps "Search Engine Land" on a searchengineland.com site - well, to quote Matt Cutts (Google anti-spam team):
"If you show your company's name and it's Expo Markers instead of an Expo Markers logo, you should be fine. If the text you decide to show is 'Expo Markers cheap online discount buy online Expo Markers sale ...' then I would be more cautious, because that can look bad."
Matt Cutts: Gadgets, Google, and SEO » SEO Mistakes: Unwise comments

And as a side note, if you are wondering if this sort of thing will be penalised when it is abused - we know Google is not yet detecting these techniques as spam because a look at your log files will show that googlebot is not reading css files.
When and if we start seeinf our css crawled, we'll know there might be penalties

(Caveat - I can't actually check what was happening on SEL as they seem to have changed it already. Pity the poor screen reader, wondering what site they are on )