The paranoid still have FreeNet and Tor, btw. Failing that, you can always roll out your own peer to peer anonymous google-based search engine, but good luck securing it or keeping spammers away.
Sroogle is specially useful when googling via TOR. Otherwise google (and others) block queries thinking you're a bot (or maybe not because of that...) and ask to fill a captcha over and over again.
It's probably because there is so much traffic coming from the Tor exit node. Google just sees it as a huge amount of traffic coming from a single source.
At work, once every month or two someone in the building must be doing something that is really hitting Google because every Google search will require a Captcha for a couple of hours.
It could be a manual exception. I doubt that Google has the time to track down all Tor exit nodes or work ISP IPs and flag them as 'not spammers or bots.'
I guess this is good for people who are worried about what Google collects about them.
Personally I feel there's a bit of a moral issue in doing something that would cause the system to break down if everyone did it. Also the page is uglier and takes twice as long to load as google.com (longer perceptually, I'm just going by what Safari's web inspector says).
The "system" wouldn't break. Google might break (in reality, they'd just find some other way to make money). And I'd shed no tears and move on to something else.
Such a service would be completely useless to me since I've "incriminated" myself 100 times over already with Google (I suspect most people are in my situation). Most likely won't make any difference if I start using such a service now.