Re: Embrace and extend?
"Cyanogenmod is a threat to their Android business model, because makes it easier for OEMs/carriers/users to rid themselves of the Google layered software that helps Google make money off Android."
It's no more a threat than Samsung with Touchwiz or HTC with Sense. Both still offer Android and access to all of Google's services which bring in revenue for Google. To get certified I'm pretty sure that CyanogenMod had to remove root as a standard option so in effect they're just another Android version with a few customisations. Frankly I don't see Google caring at all unless / until they partner with someone like Samsung or a major carrier *and* start developing their own major apps like Maps etc to compete.
"Don't ship it with GAPPs, and problem solved! To which Cyanogen to my knowledge has never shipped officially with any GAPPs ever..."
Your knowledge doesn't stretch very far in this instance. It used to always ship with GApps bundled and that's why they got the cease and desist letter in 2009.