With the uptake of HTML5 and the <nav> tag it is now semantically possible to isolate navigation from content...
True, though the HTML5 community hasn't settled on how to use the tag. Many in the community think that no one has defined what it's for, and that it's pointless. And after that part of the spec is made more specific, browser builders and search engines will still need to get on board.
which in my opinion means mega menuing will not be detrimental for either the user or SEO
Search engines can already pretty much identify drop downs and breadcrumbs.
The issue for me would still be that such a large set of links isn't focused... again, giving both the user and the search engines too many choices.
If you, say, de-emphasize the text content that's enclosed in nav tags, you are weakening the effect of that anchor text uniformly.
In classic onpage SEO, though, pre-mega menu, anchor text on a page was considered an important focusing factor, used mainly for emphasis. But if the sectioned off nav text is such a large mass that it requires deemphasis, that change in the algorithm ends up still having some sort of defocusing effect on the page, albeit in a different direction. I hope that makes sense.
A concern in the HTML5 community about the nav tag, in fact, is that its application to a mega menu probably should differ from its application, eg, to breadcrumbs, and its application in headers and footers should differ, etc. I don't want to sidetrack us with an HTML5 discussion... but it needs to be said that while the HTML5 nav tag might eventually section off links, it hasn't yet been determined what the uses might be.