Yes absolutely. I don't think anyone in this thread or in the article denied that the Google Toolbar sends data to Google. And you are absolutely right that Google's use of the data collected should be clearly stated in a privacy policy and EULA. It might be, I haven't read them.
But the article clearly covers the available public statements on this issue and patio11 dug up a post from Matt Cutts in his comment below that directly addresses this: http://www.mattcutts.com/blog/toolbar-indexing-debunk-post/.