I do think Google is somewhat overpriced. Dont get me wrong, I have a lot of confidence in the companies ability to deliver some great products, but their share prices are riding on the slightly inflated side IMHO. I wouldnt be suprised if they dipped and leveled out at some point in the next few years.
Oh and as far as Googles "business model" goes, I never saw a problem with their advertising model. With the amount of hits they get, what else do they need?
YouTube have started to use Google Adsense for their onpage advertising since April I believe. See Google doesnt even need to buy them out, theyre still making enough from them