True, but PR penalties are the least to worry about...how about being banned by SE's. Cloaking is Black Hat SEO, and SE's are well aware of this practice and how to identify it.
they're well aware of how to detect the stupid ways of doing it(user agent) but for someone with a more complicated setup they(in my opinion) rely most on manual reports. Which a lot of times don't come in. I've actually seen a domain that has been around since 2003-2004 that's cloaked with thousands of pages indexed.
In 2003-2004, the complicated SE technology wasn't available, so let's say they have managed to do this for about 2 years, not five. The SE's will catch up... I just don't think it is worth the risk, and most aren't savy enough to get away with it for too long. I'll just continue to be honest with my work, and earn what I rightly deserve.
Cloaking wasn't around(it was)? Or cloaking detection wasn't around? Either way. Something being indexed for that long is the perfect way to tell how effective they are. It didn't rank well(1 backlink), so no people actually visited it. No one got pissed off by link spam either. So it was simply the SE detection vs. his cloaking. And at least for now, cloaking won. It's going to be a cold war. I don't think the SE's will truly catch up, but I think both sides will always be exploiting eachother and fighting for even a tiny edge. But as there are fewer and fewer tricks left, the ones that remain are more powerful. It's natural selection. So the techniques may be more rare in the future, but I'd wager they also would be much more effective.
OK so cloaking won, but what was the point...as you wrote "It didn't rank well(1 backlink), so no people actually visited it." So fooling the SE's and hiding under the radar was the only point?. just to see if it can be done? What a waste of time.
I don't know his motivations. But what it said was that the algorithm left to it's own devices cannot detect cloaking. What it also means is that a site promoted legitimately(not link spam) would have a good chance of never getting automatically caught. It speaks to level of sophistication the search engines have(or don't), and if you can't see the purpose in knowing that, then there's really nothing I can say here. Most sites cloaking get busted because they link spam, and that makes angry webmasters who sometimes report to Google. The only real line you said that I was disagreeing about was "and SE's are well aware of this practice and how to identify it."