I recently bought a domain that formerly (last year) contained links to wood pills, gaming, Cuban stogies ... the works.
While it's possible that the domain was hacked, my guess is that it was part of a link network that is now being dismantled by its owner due to their target sites being removed from the Google index. (I checked)
After getting this domain set-up, it's still showing PR4 and it ranks well for its main keyword.
So, my question is this: I know that Google often removes the ability of a domain to pass pagerank, and when they do, there's no visible indication of it. However, is the fact that a domain is showing visible PR AND has a first page ranking for its main keyword an indication that the domain will also pass PR?
I wouldn't count on anything with a domain like that... In fact, the first thing I would do is put new site on it, get it in WMT and send a reconsideration request detailing the situation, including the change of ownership, and letting them know the site is and will be completely different than it was, because any trust based weight the site could have has likely long since been destroyed and you'll need someone to 'push a button' to start gaining that back.
I remember a MC video from a year or two ago where he said he'd try to stay away from those type of domains, because rebuilding the damage that's been done can be difficult, if not impossible in some cases, but since you have it, I would get a new 'squeaky clean' site built on it and get it in front of the eyes of someone at Google to try and start undoing any historical damage ASAP.