I have no idea what the answer to this question is, of whether blasting a competitor (or your own site) can hurt the rankings..
I suspect that it's more complicated than this. No one on either side of the fence is saying much about the content of the sites in question. Are we talking about a 'legitimate' type website, nice design, quality original content? Or is it some spammy-looking ad-bait site?
My guess would be that blasting a competitor, or yourself for that matter, may very well hurt the rankings if we're talking about a crummy site. Nothing against those, but you know the ones I mean - the kind you yourself would click on and think "Bah, this isn't what I'm looking for, this is just to make me click the big fat Adwords box taking up half the page." Blasts probably trigger some sort of extended review of the site - perhaps still automated, but a more in-depth analysis. May well knock the site off the rankings almost immediately, and perhaps permanently if it's determined to be a 'junk' site. But, again my guess, if it passes muster as 'legit' I would say it will almost certainly return to the rankings.
Could the blast help the site.. that I don't know. Google certainly wouldn't intentional 'reward' a site to compensate for such an attack, and of course they try to keep spammy backlinks from helping rankings - but I guess it's possible it might help a very little bit, if any of the blast produces links that G mistakes for legit.
So.. all in all, if the competitor's site looks like something you think Google wouldn't really want on the SERPs, this could be a useful method. But if the site is of relatively decent quality, it's probably a waste of time - might knock them off short-term, but they'll be back.