It's not banning. It's not even "punishing." It's promoting those people and companies that do more than everyone else is doing.
If 10,000 sites are doing the exact same thing, only 10 of them can be on page 1. (This fact existed long before Panda.) If 10 of them actually do some extra work to differentiate themselves from the other 9,990, who do you think should get the privilege of being on page 1?
Sure, initially, 10 sites who just write crap rewrites will shoot to the top. But pretty soon some of the other 9,990 will catch on and write non-crap re-writes, which (should) put them above the crap re-writes.
I deal with the same issue in my niche (hotel reservations). There are thousands of reservation sites and affiliate sites that all use the exact same hotel descriptions. Why should my exact same hotel descriptions rank above the thousands of other sites with the exact same descriptions? They shouldn't. That's why I rewrite the descriptions for some. That's why I develop extra content that isn't available on other sites (until it's scraped). That's why I have UCG. I've also spent years building the brand for the site. Those are the reasons why my site is above thousands of other cookie cutter sites. Sure, I also rank behind the Walmarts of the travel industry for some searches. But I don't expect to be #1 for every possible related search.