Shepherd - 10:42 am on Oct 24, 2012 (gmt 0)

Google can certainly downgrade

Of course they can, and they do once you receive an "unnatural link notification" but for penguin alone I would agree with McMohan as it probably only devalues links. That said, there are probably trip levels in penguin which will set a site up as a candidate for a manual review and subsequent unnatural link action.