Lets face it, Google's penalties are not entirely fair, and do not necessarily create an even playing field. Sure there are many sites breaking the T&C's that have not been busted yet, but inevitably will one day. But its also the sites that are buying links that make it really unfair. So do we turn to the grey side, and start buying links to compete? Only to find they suddenly include something new in their algo to rememedy link purchasing?
Like most of you I also experienced 7 figure hit in Florida and Panda. It's painful, but you do what you can and move on, only to learn. This is our industry, if you can't take the heat, get out of the internet.