kaled - 10:35 am on Feb 10, 2009 (gmt 0)

Q: Do I have proof of my point?

1) GoogleGuy/Matt Cutts has said on several occasions that absolute urls are preferred.
2) Whilst sites can accrue penalties and might accrue trusted status, it is pages that are ranked, not sites (or so we are told).
3) If the old urls are vanishing from search engine indexes and being replaced by the new urls, then it would appear that everything is working correctly. If this is not happening, you could use this as evidence to support the case for updating internal links.

As I understand it, 301 Moved Permanently is intended specifically for the job you have described.

Kaled.