I don't fault Google or their algo one bit in this incident. After all, JC Penny IS a good source for a "dresses" search and all the others mentioned. What page would the average person want to see for a "dresses" search?...a Wiki page on the history of dresses?
Additionally, what if JC Penny is telling the truth and THEY didn't buy the links?
If you were the SEO of one of JC Penny's competitors, how would YOU get Penny removed from all the top spots?
What if one of their major competitors had an SEO firm that got a little too cute and thought a great way to nail JC Penny would be to buy a bunch of links, then send an anonymous tip to the NYT on a possible great article subject? What if they did that knowing full well that it would entice Google into wiping out not only the bought links, but also lots of JC Penny's other naturally acquired links in the process, AND as a side benefit, stick JC Penny with a few million dollars worth of bad press in the NYT?
"The New York Times asked an expert in online search, Doug Pierce of Blue Fountain Media in New York, to study this question"
Gee, now why would the NYT do that out of the blue? Why would the NYT suspect something was wrong with JC Penny being returned for search terms like "dresses" or any of the other searches mentioned? I wouldn't.
How is it that a lowly NYT writer could click through a few serps and suspect something was wrong even though Google's algo and all their human evaluators didn't suspect a problem, keeping in mind that JC Penny was already on Google's radar since November?