Google could scan the interwebs from within China (i.e. behind the Firewall) then technically they would not be censoring the results and just be scanning a pre-censored internet.
I did feel it was a bit of bluff on the part of Google. I mean can you really imagine that a bunch of old men in Beijing really care if some American company is serving ads to the people or not. And I sure hope that Google were not banking on the people lying down in front of tanks rather than lose the ads from their PC's.