As the Herald-Sun story noted, I did find myself confronted (thanks to the power of Google) with a moral dilemma. And as Eric notes, there is no clear direction for what someone who discovers an instance of plagiarism by a university professor is supposed to do about it, or how. After the fact, it appears that my response was consistent with the American Historical Association's Statement on Standards of Professional Conduct. I quoted from these guidelines earlier in discussing what plagiarism is. From the same document:
All who participate in the community of inquiry, as amateurs or as professionals, as students or as established historians, have an obligation to oppose deception. . . . After leaving graduate school, every historian will have to depend primarily on vigilant self-criticism. Throughout our lives none of us can cease to question the claims our work makes and the sort of credit it grants to others.
Now, that's a very sensible guideline.