I think where the ad "crosses the line" here is the faux star rating; the other (unpaid) listings have been user rated/ranked and Patrick's ad is misusing the trust that users of the site potentially put into the ratings.
I think that if the stars were removed, or, say, greyed out with the "Rated by lots" on top that would be absolutely fine.
Agreed, though it depends on how the other ratings are established.
Communication is ultimately about the semantic information conveyed and not the specific words used. If you intend to convey the wrong information, even by using technically correct words, that still counts as lying to me.
Since the other items say "rated by 1" I'm inclined to believe it's a small community that self rates the items. Hence, patio11's co-opting of the styling conveys the information "lots of members of this small community rated BCC 5 stars" rather than "lots of some random group of people rated BCC 5 stars".
I agree that graying out the stars would make it more honest.
I think that if the stars were removed, or, say, greyed out with the "Rated by lots" on top that would be absolutely fine.