Your argument seems backwards. The reason Wikileaks and Assange have been plastered all over everything is that there is a huge demand for information about them. There is no doubt that Time could have created a lot more interest and controversy and by extension sold more issues (thereby pleasing advertisers more) if they had been honest and ethical and put Assange on their cover, but evidently they have other priorities.
Honest and ethical? This isn't the Nobel Prize. The criteria for POTY is set by Time and can be bent and justified however they see fit. In 2006, it was everybody. It has also been "The Endangered Earth," "Middle Americans," and "The Computer."
They also opted to not include Hussein or Bin Laden. In 2001, it was Giuliani for his response to 9/11, and not anyone actually involved.
Suffice it to say, they have a vested interest in avoiding the more contentious choices. They are becoming less relevant every year, and it seems likely that a lot of their readership still thinks facbook is cool.
Hitler was a past MOTY -- so they didn't always skirt controversy. 60+ years later, I know that -- 60 years from now, no one will know who got it in 2001.
Perhaps 'ethical' goes too far. It depends on what the real basis was for such a dumb choice. Clearly they can choose whoever and however they want, but given the 'well duh' nature of an Assange pick and the prevailing political climate, it seems reasonable to question whether there more is going on than journalistic whimsy.
