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[edited by: caveman at 4:22 pm (utc) on Jan. 27, 2006]
[edit reason] No specific URL's please, per TOS. [/edit]
> Is it possible to be penalized for it?
Not sure I'd use that word, but certainly IMO, it is possible that footer nav done badly can hurt a site more than it helps it.
> Is it considered similar to a link farm?
No that's something different. It is often considered spammy though, again, depending upon how it's done.
> Of course, it contributes additional anchor text/hyperlinks on the page, but is there a point where it is considered spamming?
As noted above, yes. Of course, no one knows where that point is, at any particular SE. ;-)