It still holds true in most cases.
It's general knowledge that you could damage your own site on the 'bad neighborhood' principle, and there's increasing evidence that Google is targetting link sellers
I don't doubt your experience - though it's the first time I've seen a specific case of a link buyer being penalised - but I'd still suggest that this would probably have been a 'special case' rather than the norm (or the algo). It is much more likely, in my view, that this was a specific case with (from Google's POV) overwhelming evidence of who was doing what, including manual intervention.
I don't think the link-selling situation is dire enough for Google to give a license to destroy others' sites - even at great effort and expense.
But if we start to see regular reports like yours, I may have to eat my words.
[edited by: Quadrille at 3:35 pm (utc) on Feb. 5, 2009]