What are the extents of their definition of 'tainted coins,' because honestly that's what this is. How do they determine what coins are tainted? How many jumps from 'tainted' addresses before they are considered clean? Are they ever considered 'clean' if they were ever at a 'tainted' address?

This is precisely why we need something like Dark Wallet or Darkcoin. There wouldn't even be a discussion about this if it wasn't possible to trace the path of the coins.