tedster - 5:25 am on Nov 23, 2011 (gmt 0)
There's evidence that Google "wants to" credit the original source in the SERPs, but many times a more authoritative source who is quoting in full or syndicating (even with full acknowledgement) will still rank higher.
The fact that Google does not want to return two copies of the same content on page one is certainly understandable. A lower ranking for any particular page isn't the same as a penalty on the website, it just means it doesn't rank as well for that bit of content.
I think the public communications we've seen this year - including the "scraper update" in January, plus authorship mark-up, plus the scraper site reporting form - all add up to a confession that Google still struggles with identifying the "canonical source" for any specific bit of content.