I look at it this way - if Google has implemented such a fundamental algo addition in the guise of Panda that looks at the "quality" of the website and then in effect massively demotes the power of the website to rank in Google's index then it would be a huge oversight to not then de-value the power of the links from that website.
If you are saying that this website no longer deserves to get rankings in our search engine then by default any links that pass from that website MUST NOT deserve to be treated with the full "power".
We talk all the time about getting "quality" links from "authority" sources - if Panda suddenly makes you a non-authority then the links you pass will no longer pass authority. Surely that is link building 101?
You can no longer measure cause and effect because of the wide ranging effects of Panda - and maybe that is why. Panda is affecting not just content but also links.
I have said it from day one - if Panda is integrated into the algo then it has to factor into "trust" and "authority" - it is just logical.
I mean we all accept that we don't see the "real" page rank - and that it's not just pagerank it's other factors that affect the quality of the link. So why the big leap to seeing Panda quality score integrated into link strength.
It's bizarre to ignore Panda effects on links yet say there are fuzzy things like the "authority" of the link you have got - that all PR 5 links aren't equal etc.
If we accept that there is more to links than raw pagerank then we must be open to the idea that the biggest algo change in years might be an influence.
[edited by: Swanson at 11:18 pm (utc) on Jul 18, 2011]