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Thanks Everett - that's exactly what I intend to do.

We will be testing two new sitemaps with 100 x URLs each. 1. With just the file extension removed and 2. With the entire cropping part of the URL removed, as suggested by Matt.

Will be interested to see whether just one or both of the sitemaps are successful.  Will of course post the outcome here, for anyone who might have this problem in future.

My personal view, although I'm sure some will disagree and stamp on my toes, is that complaining about competitor tactics is a waste of time. The chances of Google adding a manual penalty based on your report is very, very slim so your time is better spent working out ways to beat them the right way.

Looking at their backlink profile, there are a huge amount of paid links, general directories and not really much else. With that in mind I'd say that although they have a decent amount of linking domains it should be possible to beat them without using the same tactics.

Another thing to remember is that even if you did go down the route of trying to copy their method you wouldn't be guaranteed to succeed so might waste a load of time and money with nothing to show but a penalty.

As for the spammy footer... it might be adding some benefit to their site but I doubt it's having a huge impact... and it just looks horrid!

Or if you're dealing with a website that requires link-removal.

Buzzstream is good, it's not free but you do get a free 14 day trial: http://www.buzzstream.com/link-building/plans-pricing

Have you looked at your robots.txt file to see if you are blocking specific bots?  Visit yoursite.com/robots.txt and check whether you have something like this:

User-agent: [example]
Disallow: /

But you may have something else to specify that Googlebot is allowed to crawl the site:

User-agent: googlebot
Allow: /