Does the Daily Mail even show up in Google News? I thought they were like the Onion, but not as funny.

Well, unless you count some of the badly Photoshopped pictures they've released.... See http://www.psdisasters.com/search/label/Daily%20Fail if you don't know what I mean.

This intrigues me as well due to the fact that many news and sports websites simply post official Associated Press material. I would think that this sort of thing is not frowned up as strongly as simple content farming due to licensing agreements.

But of course that is relative to the observer.

Google's listings aren't really about being "frowned upon" or not. It's about the best results for a given search. An RSS aggregator like the Planet X sites or local newspaper simply running AP stories isn't doing anything wrong, but that still doesn't mean Google should return them to you when it could send you to the original source. Scrapers and content farms are parasites, and again to the extent possible I mean that term morally neutrally. It's simply what they are. Google doesn't have to make a moral call about parasitism to determine that it isn't in their interests to return those pages.

I don't think there is an "original source" URL for an AP story. The content on hosted.ap.org is more like a scrape of various client newspaper sites than vice versa and it's certainly not the most usable interface to AP content.

Frankly, a lot of local newspaper sites are looking more and more cookie cutter. You will see that many papers use very similar CMS systems & their national news is almost identical. They are also plastered with ads as well. They do have defining local content though, but their national coverage is generic and usually outsourced. I am not sure I would rank the quality of some of their pages as being better than a content farm that got their info from the same source.