I've waited until Allegra has settled down before posting this....
On most datacenters now, I'm seeing considerable relaxation of the downgrading of this effect. Legitimately linked sites, as long as crosslinking is not excessive and there are some independent inbounds, seem to have come back. It appears that Google has become much more discriminating in which site in the linked group it's suppressing and for which keywords/phrases.
So... if partner-A mentions partner-B and links to it, partner-B no longer gets nuked for its own name or for other phrases unique to it.
Not completely sure about interlinked sites going after the same keywords... This appears to have been relaxed somewhat. Anyone else seeing this?
I'm also seeing movement upwards on some sites I've been called upon to fix, where the setup is in fact really junk right now and deserves to be nuked. Common inbounds from mirrored links pages from an SEO company in India... all sites with ROS interlinks, etc... and yet these have moved up from roughly #300 to now about #90 (for a very non-competitive 4-word phrase ;) ).
So, I see more relaxation of this filtering than I in fact was even wishing for. It indicates to me that cleaning up the inbound links to sites in a group and getting some independent inbounds would perhaps help more.
I'm still wondering about whether I should let the sites interlink with straight unblocked html links, though. This kind of flitering could happen again.