FredOPC - 5:40 am on Feb 27, 2011 (gmt 0)
Indyrank, not a bad theory here, but I'm not sure G would want to strictly devalue internal links. They are a valuable source of information about what is the most important part of the site. I think this is a sitewide aggregate penalty, not simply a link devaluing.
Case in point: several of our pages have dozens of quality external links from related sites coming into them - in fact, more high quality external links than competitor sites - but in this new algo, those competitors (some of them truly ridiculous) are coming out on top... apparently because their sites are not affected by this penalty.