If this is the case, then it would compromise the credibility of Google search results. I think it's too early to say for certain if Google views Wikipedia as such a huge threat that it would go out of its way to create a new project for the sole purpose of intentionally ranking them higher than Wikipedia.
Wikipedia is as much of an icon of the internet as Google. I'm predicting that Knol will go the way of Google Answers for the same reason why Digg remains a stalwart of user generated news - it's the community.
Google definitely views Wiipedia as a potential threat. Just look at their SERPs... Wikipedia links are usually in the top 5 on pretty much every factual term.
