In response to all the questions and legal issues, Yelp decided to make two changes.
(1) You can now see filtered out reviews (2) Yelp is discontinuing the "Favorite Review" feature
Here is one comment from a WebmasterWorld thread on this change of heart:
Ahh this is great. Watching them back peddle and clean up yet claim they are doing nothing wrong... ;-)
Never understood how such a large brand got away with what they were doing. It just didn't seem right (how they let companies control the reviews if they bought in to advertising).
Wonder how many companies are going to want a refund for retracking a service they are no longer offering... Get out the checkbook.
Yes, this is a good first step for Yelp.
Forum discussion at WebmasterWorld.