After reading the article, I don't see where Google is totally wrong on this.
By linking to Pirate Bay, the guy was linking to a known site that infringes on copyrighted material. It does not matter that the guy put his work up on Pirate Bay, or that he gives it away for free, its the site that he linked too.
And he is not the only one that has had their adsense revenue pulled by linking to Pirates Bay.
In this case, I support Google...