The situation is starting to become more clear now, but those who were hit still have some questions. One answer is probably contained in this from the Google guidelines:
Quote:
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Don't participate in link schemes designed to increase your site's ranking or PageRank. In particular, avoid links to web spammers or "bad neighborhoods" on the web, as your own ranking may be affected adversely by those links.
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It is interesting to note that many were large blog networks in which each one had dozens or even hundreds of outgoing links on each page of the blog to other blogs that are in the network. As a result, in some situations there were more than 100,000 cross links.