My only issue would be that plugin authors are allowed 3 tags, which are heavily weighted in terms of what is returned in searches. This feels more or less a way to bypass that limitation by allowing this plugin to inject and modify the search results for other keywords. I've been using this same method for the past 2 years outside of .org for recommended and required plugins. It works great, has proven to show an increase in installations, and keeps the interface consistent with what is already provided for our users by WP core. The ONLY result we do modify though is OUR brand name, so our plugins are displayed at the top of results when a user enters our actual brand. We do supply the data to merge our results in based off the keywords found in readme.txt for our external sources.
Since the algorithm and weighting isn't really documented or floating around to easily find - we insert into those few keywords (3 from the tags in readme + 1 for brand name + 1 plugin name) based on the number of active install counts. As our original goal was to include this functionality in our .org plugins for recommended plugins/extensions we provide, we took the route of adding an additional tab to the filter bar, so users could just click that to find OUR recommended plugins easily.

I was weary to ever attempt including this functionality in our .org plugins because I was told in the past when asking about this functionality specifically was not allowed . It was also mentioned directly that plugins and themes should never modify the search results (just to be clear - this was specifically mentioned that it only applied for wp.org hosted repo themes and plugins). I wasn't asking about any external sources, just simply using the plugins API more effectively for recommended plugins/plugin extensions that we would want to encourage our users to use as they provide a better experience. Some aren't even ours, but other third-parties we've taken time to integrate with that are also hosted in wp.org.

I do believe that this exposes the following 2 issues:

1. WP core does not provide a clear and consistent way for authors of plugins and themes to recommend plugins.
I think the "Recommended" tab in the "Plugins > Add New" section should be actual recommendations from the active plugins and active theme installed. If I have WP Forms installed, I shouldn't be "recommended" an alternative forms plugin like Ninja Forms to use. Vice versa. This goes for theme functionality heavily as well. If a theme integrates certain features to provide compatibility for other plugins - those should be recommended. When themes/plugins have a need, they usually do recommend, either with TGMPA lib or another alternative method. It's inconsistent, and makes for a poor user experience because there is not any consistency. Core provides APIs already right in the area where users "normally" would go to add new things. This should be the REQUIRED way plugins and themes recommend and require their suggestions. Make the "recommended" section useful in Plugins > Add New, and allow them to have some indication WHO is recommending it, so it's not just something up in the air in terms of actual compatibility or where the suggestion comes from.

2. The search algorithm was pretty terrible at one point in time.
It wasn't very long ago where I constantly would go to plugins > add new, type in "Yoast" and "WordPress SEO" wasn't a top result. Other brands were the same way, and it was always frustrating that these searches could be that inaccurate. I don't know specifics of when or how the search algorithm was changed/improved, but it works much better today, and provides more relevant results based on the query. Even with this improved accuracy, it was expressed that there's a desire to "help users," which means there's still a gap between what is being returned as results, and what this plugin's authors think should be returned. If many of the same people worked on the search algorithm, along with worked on this plugin - it sounds like the actual need for the author is to target their keywords better by limiting the scope of what functionality their plugin provides, and do better marketing to increase their positions in the search results. Anything outside of this - as is mentioned in almost all comments here - feels like preferential treatment, an unfair advantage, and misleading to end users. That's not to discount the fact that there's a perceived issue by this plugin's author in what should show up in the results, how they are displayed, and even in the underlying algorithm providing the order.

Truthfully - I'm on the opposite end of the spectrum. I think they made a good decision, and I agree that this plugin took a good approach in terms of being helpful to a user, but it also clearly shows how easily abused something like this can be, and what to do/what not to do. Ad placements, and preferential displaying of cross-marketed brands/products would become more common. Having been told this sort of functionality isn't allowed in the past does seem to go with the "preferential treatment concerns" people have mentioned in nearly every comment. Every situation is different though, and there could've easily been misunderstandings about what the needs were at the time. This was a long time ago, and reviewers/volunteers (whether paid or not) don't really have that kind of time to invest in digging deeply into every scenario, so it's understandable and I don't hold that against anyone. I look forward to seeing what comes from this, and hopefully the underlying concern truly is based on the user experience rather than ulterior motives as have been suggested by others. Only time will tell I guess!