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I'm hoping I am being paranoid here. If this were to happen, basically many hundreds of innocent sites in this case would end up getting banned. Including all the sites on the topic that really count. If Google was in the habit of doing this sort of thing, there'd have to been situations like this for many other topics, and if hundreds of innocent sites had suddenly got banned probably this would have become public knowledge. However, what if this isn't just paranoia?
In the case that "another site being linked to by this large site will affect the "linked" page and even maybe some adjacent pages, the chance of affecting the whole site (and the page you link to) is pretty remote.
DMOZ is a good example of this. There are some categories that are PR0 due to DMOZ inadvertingly linking to "a bad site". But DMOZ as a whole thrives with PR -- and isn't banned.
The internal linking structure play a big part in this.
www.widget-links.com/widgetlink.html is a directory of widget links, with 100 pages of links, many with over 100 links on them. He even has pages with links to other link lists and webrings. I would be very willing to bet that there are at least a few links to bad neighborhoods in there. But they still have their PR.
I would be willing to bet that there is a threshhold level where you will not be considered to be part of the bad neighborhood, otherwise the entire web could quickly become a one big bad neighborhood.
I link to a manufacturer site that comes up as PR0. I do not know why thier site is PR0. But even if they have some sort of penalty, I don't care. It is one out of over 100 on my manufacturers list, and I legitimately NEED to link to their site. We also have a review of one of their items.
If google chooses to penalize the links page and the review as linking to PR0, I won't complain. But if our site gets a penalty, and anyone who links to us gets a penalty, google will suddenly have a major problem where an entire industry will disappear from their index.
My suggestion would be to link to it, but watch it. Use your paranoia to your advantage.
[edited by: heini at 8:31 pm (utc) on Oct. 18, 2002]
[edit reason] we wouldn't edit for widgets... [/edit]
>If google chooses to penalize the links page and the review as linking to PR0, I won't complain. But if our site gets a penalty, and anyone who links to us gets a penalty, google will suddenly have a major problem where an entire industry will disappear from their index.
In this specific topic area, which should be easy to figure out if anyone checks the site in my profile, basically if the site in question got penalized for linking into a bad area, and every other site that links to them, this would result in most every site on the general topic in Google suddenly becoming PR0. Similar to the case you mention where an entire industry would disappear from their index. The site in question, while not in the form of a directory, amounts to a de facto one because pretty much every related site worth mentioning out there on the Net they link to. Each subsection of the site contains links to related sites.
In that case, I'd completely agree with fathom. If you link to a page on that site that links to pages likely to get banned by Google, then it wouldn't seem unlikely for that page to get PR0 and for you to get a PR reduction for linking to it.
If you link to the home page of the site that has links to banned pages deep in the site, then it would seem odd for you to be penalised.