I so love finding these gems in the deep areas of forum discussion. That being said, let me share with you what I found. A Google Groups thread has a response from Matt Cutts of Google, basically explaining their was a bug in Google's algorithm for detecting, what I understand to be, a form of content spam due to an IFrame.
The site in question is atlasshrugs.com and Matt Cutts said:
Hi, we looked into this, and the blog in question was ranking lower in our search results because of an algorithmic error that has now been fixed; the site's drop in our search results had nothing to do with the views expressed on the site. Essentially, our search algorithm saw a large area on the blog that was due to an IFRAME included from another site and that looked spammy to our automatic classifier. I believe that this bug has been fixed now. We also added additional safety checks to the relevant system that would escalate to an engineer if this site had the same issue in the future.
The site should be ranking higher in Google within 24 hours according to the people that I talked to. Thanks for mentioning the site on this discussion group to give us feedback--I appreciate it.
Matt does not often come into the a Google Groups thread and reply, so this caught my eye. As you can see, Matt explained Google had an "algorithmic error" with their spam "automatic classifier" from when it came to an IFrame on that site. Google did not fix the issue with that particular site, instead, they fixed the algorithm, which should help other sites hit by this penalty. Matt explained later on, "we adjusted the algorithm in question to make more robust, so the change also benefits any other sites there were affected."
For more details, check out the Google Groups thread.