Law enforcement has been asking for tips to help solve crimes for years. I'm not necessarily agreeing with the way this emissions stuff is handled, just that your comment about government encouraging people to turn each other in is silly.
Solving crimes has nothing whatsoever to do with this type of thing. I disagree with the analogy. Apples and oranges, in my opinion.
Here's another example of misuse by government: Mr. Obama has a web site you can go to for the purpose of reporting anyone saying or post things against him, or his administration. I have to wonder what they do with that information.