I will refine your hypothesis a little.
a) It isn't companies with the highest margin who win, but the ones which are able and willing to devote the greatest percentage of revenue to performance driven advertising. If the company has a slim margin to begin with, they will never even be able to start in the "race."
b) Education is a better example than car insurance. While there are geographic variances to what ads are shown, nearly all of the ads will be for for-profit schools (many of whom spend more on acquiring a single enrollment than on educating them.) Additionally, the organic results will either be for performance marketers driving leads right back to these schools, or it will be objective journalism plastered with banner ads and contextual text ads for for-profit schools (Forbes, Washington Post (who owns and receives half of their revenue from Kaplan but thats another story..))
c) Some markets get so abusive Google puts very heavy handed and aggressive rules in place. For example, if you read the FTC's news releases regularly a common scam is someone operating as a payday loan operator simply emptying bank accounts (not sure why this isn't an FBI/DOJ issue.) Its easy to bid high when your end result is the entire content's of your customer bank account. If you are operating in a market and your competitors start doing this stuff -- your fucked. Google can take years to catch up.
d) The "quality score" means little. It largely has to do with how a site looks, not what it actually does. Misleading ads tend promise more and thus get better click through rate which means they are even more likely to show up higher, not less. At the end of the day, Google will let low quality site run, they just charge them a little more.
e) The most disturbing thing to me is how Google is trying to wash away organic altogether. The original article points this out. Aaron Wall (SEOBook) has been pointing this out for year. Ben Edelman has been doing an excellent job of busting Google's bullshit PR (even though he may be paid by Microsoft for consulting its academic level work of the highest quality.) Google wants to keep serving that organic content to users, but block them from flowing through to the original source. Google Images' recent changes reflect this exactly.
f) All of this makes me think Google's original business model is in serious crisis. Ironically, Google is doing the same revenue escalation to their own users as their advertisers are forced to employ. If desktop revenue is dropping fast, Google has to crank up the "aggressive" meter to milk out more revenue from a diminishing ad clicker user base.
g) This is great news for the next search companies. Google is dependent on their ad revenue to fuel their behemoth enterprise. They are sacrificing their own product in an escalating fashion. (If you use AdBlockPlus you probably never even noticed..)