I can go put a shady app in the Android Market place right now. Does Google check? No. They rely on users to report anything. App gets reported, then Google checks. It's entirely user based. Google finds you put a shady app on, you can't develop under that account anymore. Simple.
If an app has 10k+ downloads, I consider it safe enough, and will download it. Nothing under that(except for SL, obviously).
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