I can understand how someone could see the situation as losing their content to Digg, but I think the end result is actually more traffic for the original site. Because Digg as a site carries more authority in Google the content there will rank for more and for a broader set of keyword phrases than it would on the original site. So more people will see the Digg page and while not all will click through to the author’s site I would think enough would to ultimately bring more traffic than had the Digg result not been there.

Google could be placing too much emphasis on the authority of the sites though. Perhaps they could still send traffic to the original site for the long tail searches it would be getting if the content wasn’t on Digg and send Digg the traffic for the broader search phrases.

The way i see it, Digg shouldnt be appearing in serps, It’s a news middle man.

On a side note, The digg mirror is a screper site. I know it’s there to provide access to content if the site becomes a victim of the huge amount of traffic, But they are still downloading entire pages and content and diplaying it on thier own domain.