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[edited by: tedster at 2:58 pm (utc) on Oct 19, 2012]
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My counter argument to this is that highly focused small sites (generally EMDs as well) will fall foul of this 'quality' indicator because as narrow focus for the site will by definition cause a narrow focus of inbound link text - which is what appears to be triggering the penalties.
Is there any EMD who lost rankings in this update for query terms other than their domain's exact match term?
This leads me to believe that this is a cheap fix by G with little analysis behind it other than, let's hit EMDs by demoting pages in them with EMD keywords.
Not clear to me what you're illustrating,
I think I got hit by that. I have a site with a domain name matching the first and last name of the person the site is about. It's very much a niche site because the subject is someone that most wouldn't recognize by name. On September 28 or 29, traffic from Google dropped to less than 1/4 what it was.
The site has thousands of inbound links - all generated naturally as people linked discussions or articles about the person to my site. Probably 99% of the inbound links use the exact person/domain name as the link text.