The site was a strong PR8 and now it has a PR6 I gurantee you this is because of the link selling, look at the bottom of each of the pages of the site. Do I blame METimes.com for selling the links? Hell no!
Sorry, I was speaking in general about directories. Not about a specific directory. Thats not the way to sell links these days. Footer links are out. Today you want to keep some relevancy one way or another between the link and the page. Write some text around the links, not just throw in a bunch of unrelated links.
Three is no such thing as PR leakage, they probably had some important news listed somewhere that either went 'no follow' or moved off a high ranking home page. I guess it is possible that 'G' has decided that this site sells links and has devalued it somehow but I don't think that is possible to prove. Anyways you do have a valid point about some sites having too many outgoing links and that devalues the links but it is all in the business model I guess.
I do not normally care to much about Matt Cuts that always speak about how he want internet to be, but he mentioned some time ago a site that actually got thrown out of Googles index because of heavy unrelated footer linking.
That is what I first thought Dave E was getting at, them being thrown out of the index but they have a PR6 which is not too shabby.