I worked for Yelp as one of my first "jobs." (It was an 8 week, temporary "Scout" position in 2007. I have no inside knowledge of their operations at this point.) From what I saw, they're an up-front and legit organization doing their best, and I don't think anyone's ever been able to substantiate claims that Yelp will heckle or coerce business owners into advertising with them. I do think this restaurant owner was probably offered the opportunity to get access to additional features for business owners by paying for them and/or advertising. That's fair; instead of hawking premium accounts to users, they sell an equivalent to businesses.
They should Hubskify. You should be able to go to a restaurant, have a meal, then pick the reviewers that you most agreed with. Those reviewers should then have a stronger influence on other restaurant reviews that you see. Let reviewers build up a reputation and following, etc.
I enjoyed reading this. I recently used Yelp, when traveling for work to determine which sushi restaurant I should go to. I ended up at a Hibachi restaurant that has a sushi bar tucked away in the corner. It was apparent that sushi was an afterthought to them, and it showed. Yuck. But it had a very high Yelp score.