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CainIV - 7:24 pm on Jan 19, 2010 (gmt 0)
I wouldn't. Despite what some hear, it is not difficult to reverse penalization, especially algorithmic filtering / penalties. Just be smart and honest about what happened, get to the source, document the issue, submit the reinclusion request, and build GOOD, trusted quality links at a much lower, natural rate. The domain will come around just fine... Would you board up your brick and mortar business because of bad press in a local newspaper?
I'd suggest... scrap the domain!