The Associated Press and Reuters pull in syndicated content from other sources and they seem to rank just fine. It depends on how you use the content.
It sounds like you may be misunderstanding what a duplicate content penalty might be. That usually happens when you wholesale scrape other sites and don't have any unique content of your own. Syndicated RSS feed content wrapped within your own content should not incur the wrath of the SEs.
I was thinking about the various Blog tools out there, such as rsstoblog amongst others - I guess these should be called blog scrapers?
i just cant see how they will rank a page when it is scraped - also do they just show a snippet - I suppose that a snippet would hold - but of course you just then send the viewer offsite to view the full thing.
That's generally what happens when you syndicate someone else's' content. You link back to the original source. If you're aggregating special on-topic news that would be a benefit to your users then displaying other people's RSS feeds would be a positive for your site.
You'll of course want to have some good content of your own. That's when you can run your own RSS feeds and hopefully have others use (and link back to) your content.