You may be on to something there. I have a site I built many years ago that used DMOZ data to make a vertical portal/directory. I got hit hard back in Jan 2005 and I pretty much abandomed the site. I assume I got dinged for duplicate content.
Maybe a year ago I made the site more of a mashup and added some RSS feeds and Flickr photos. It didn't seem to help any.
My traffic has gone from about 225 visitors/day to over 5000 visitors/day.
The current toolbar is a gray bar for the site. The site was a PR5 at it's peak.