Before beginning this post, I will be honest, I struggled if I should post anything at all, because I feel like I have been writing about this PageRank update way too often in the past three months. But I found the coverage of the Link Buying Panel at PubCon Vegas 2007, from Tamar to be interesting.
Besides for Matt Cutts of Google reportedly scaring the panel (this was a saractic post by Raven-SEO) by walking in and acting all intimidating (sounds funny writing that, knowing Matt to be a nice guy) - Matt actually spoke about the recent PageRank update. Let me quote Tamar's coverage, knowing that it is not a word for word transcription of Matt's discussion:
The toolbar update was intended to reduce visible PR based on sites selling links. Google DID NOT visibly reduce PR of all sites that they caught and Matt didn't want to give a percentage. Going forward, Google is likely to continue this practice of visibly showing some portion of sites where it feels the owners have violated link selling protocol.
So Google seemed to have reduced the visible PageRank of select sites only. It seems like sites were hand selected. Is this visible PageRank reduction a true penalty? If dropping the visible PageRank is not considered a penalty, Matt said that it is possible for Google to remove the "ability of links [from a site] to pass value, but [not] show [this penalty] visibly; [or] remove the ability of the links to pass value and downgrade the visible PR in the toolbar; remove the ability of the links to pass value AND penalize the rankings of the sites/pages being linked to AND/OR the site(s) selling links; remove the ability of the links to pass value AND remove the offending site(s) from the index."
So anything is possible, but currently there have not been reports of sites losing traffic in relation to the drop in PageRank from this recent update.