Shaddows - 4:59 pm on Oct 24, 2012 (gmt 0)
There are three levels on the Dodgy Link front:
1) The main algo is perfectly capable of devaluing links on an adhoc basis. Most dodgy links (if detected) are treated this way
2) Penguin looks for positive evidence of active manipulation. It then degrades your ranking score. This final result of this degradation is currently far worse than if there was no perceived manipulation This may seem obviously intended result, but the counter perspective is that the underlying value of the page should be reflected in SERPs- that the best page should rank top.
3) Manual Action. This means that the "good" and "bad" algo's cannot currently catch your manipulative practices, so you have been whacked manually. I suspect a new algo (or new module on an existing algo) will eventually be released to catch the er, penalised infringement.
And Links are not the only Penguin element. Or necessarily the main one.
And "building" links may add to the problem.