I just did a little test - I took the subject site's links page and randomly chose 4 of her links partners. All four were also penalized. I then compared all of the links pages and found that all of the links pages were totally different - no duplicate links on any of the pages.
Seems to me that Google is definately recognizing their setup as a link farm (which it is) even though it is not a link farm in the traditional sense.
Also, it appears that these sites were not caught in a filter (unless the filter has not yet been applied to the entire index) as a search of Google shows that there are still some of the provider's sites that are on the link program that have not yet been penalized. It may have been a manually applied penalty. My hunch has always been that all PR0 penalties are manual.
_________________________
For the non-do-it-yourselfer! Proven effective fully managed package of
Websites for Realtors - Some areas available that offer immediate exposure with pre-existing top 10 search engine positions!
Visit my
Realtor websites blog for maintaining a successful online presence.