incrediBILL - 9:26 am on Feb 24, 2010 (gmt 0)

they are now increasingly targeted at perfectly legitimate vertical search and directory services

I know a bunch of directories that got penalized for raw outbound links to bad neighborhoods as I helped a couple of them clean up their mess.

Once the bad site links were removed, they got re-included.

If this is what the issue was, I think Google's clearly in their right to penalize directories that don't have the ability to provide clean and safe listings to their visitors.