jonners - 5:24 pm on Mar 1, 2012 (gmt 0)

I am certain that google's search algorithms are developed without direct input from Adwords or Adsense data.

This I agree with. Whether you have Adsense on your site, use Adwords, or have any other type of advertising is not (or was not in 2011) a Panda factor, as far as I could tell.

Panda, generically speaking, is a further development of google's many year focus on measuring user engagement of web pages.

This is am not so sure about, I have not seen any examples of sites downgraded that had a poor user engagement that did not have a bunch of other problems.

I had 2 sites affected by Panda, and one made a full recovery and the other I am still working on. For both it really is about the quality of the content. Google does not seem to care how you monetise those sites (or did not, as there was the layout update this year) or what people do once they find the site.

Although many people talk about bounce rate I am yet to see an example of a site that either gained or lost rankings after making changes to affect bounce rate. I personally made a lot of efforts early/mid 2011 to reduce bounce rate with no luck at recovering from the penalty at all.

At least from the sites I deal with, Panda really is about focusing on the quality of the written content and ensuring that you do not repeat yourself. Whether you have 50 pages, 2000 pages or considerably more makes little difference - if there is drivel and repetition you will struggle.