I can't add much SEO science to the discussion (I don't spend much time on SEO boards, and as it has been pointed out elsewhere, unless you're employed by G it's only opinion anyway), but I can share what my LL has been through in the roughly 2 1/2 years it's been online.
It started out with all pages PR0 (naturally). Incrementally index went up to PR4 and almost all cat pages to PR3. Then suddenly ALL cat pages dropped to PR0. Some months later they were all back up to PR2/3. I just checked again and some pages are now PR3, the rest (most) are 0. Index/main page have remained stable. If Google is punishing me, they can't seem to make up their mind.
This leads me to believe the G either
1. Don't have a clue, or
2. Are trying, but can't get it right, or
3. Are changing the rules faster then WMs can catch up, or
4. Any combination of the above.
I try to stay informed of the most common-sense SEO "rules". I no longer aggressively pursue straight reciprocal trades with every Tom, Dick and Harry. I base my trades and whether or not I keep them up on the honesty of the webmaster and the quality of the site. That's about it. I'm off to check on my trades now (haven't done it in a
looong time).
