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Robbie,
Even if it were only for offending pages, that would mean listings for those pages being removed. Now ask yourself, if hundreds or thousands of pages of a large site were suddenly delisted due to penalties, what would happen to the other pages of that site which were not the direct target of the action... and what would be the impact of that site's ability to rank overall?
If anything like this was ever actually implemented, the rankings on high value terms like Porn, Sex Videos, XXX and others would change radically overnight. Google would also have to severely penalize its own sites including YouTube or face a stiff possibility of an anti-trust suit being brought against them. The whole story is bogus and would never actually happen... unless required by law.
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