I think we're in agreement about the state of the SERPs. My personal belief is that they need improvement. I'm happy with where my sites are ranking, they're doing fine. My opinion is shaped by my personal searching. The current state has made it difficult to research non-work topics I am interested in, like angling.
The point I wanted to make is that we end up taking two or three steps backwards when we over-simplify what Google is trying to do.
The thing about Panda is that it tries to identify good quality sites, and as I mentioned, that's an editorial decision, it's subjective. Which means that quality sites that don't meet their algorithms ideas of what a quality site looks like are going to end up at the back of the SERPs. It's not quite like a bouncer at the head of a long line judging who gets into the nightclub, but it's an editorial decision that is subjective and debatable.
There are clear misfires that result from the effort, and that is surely black and white, no gray area there.