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Google isn't communicating very well, even with their own professionals.
Our google reps has told us that our MFA site accounts can basically forget about getting reasonable min cpcs as google wants to get rid of them. Image and flash based sites should be back to normal if they passes the manual reviews.
You have to be using AdWords at a certain budget level for some period of time, and pay $50 or $100 and take a certification test. (It's been so long I've forgotten the details, and they've probably changed anyway) Your certification lasts for two years (last I heard)
From my understanding, Google can index flash sites, so they would have the technology to see if there is enough content, relevancy factors involved. While a number of regular sites I managed were hit, most of the sites based on flash were not affected by the new algo.
The biggest effect this has had is to cause panic among my clients. Any actual damage was quickly put right, but so far only one client has not asked me about reducing the spend at Google.