I agree with most of your thinking on this Bill, but I disagree with your framing the recent changes at the Googleplex as a death-knell for the small LLs. Almost all LLs engage in artificial linking - that tactic is dragging them down. But as long as everyone goes down together, the SERP will not dramatically change (ranking is relative to your competition).
Advantage will go to websites that have the strongest, cleanest link profile.