One the primary keywords we rank highly for in Google experienced a major drop during Dec 07- at the same time Google's Position 6 penalty started circulating in the forums...however our penalty was far worse than a 6 point ranking drop...

having done some research around the time of the drop...i found the general consensus was that aging back links and a lack of new ones were the primary reason for the penalty - which was the case for our particular page. This simply reinforces the need to undertake link building on an ongoing basis. no time for complacency when you get the top spots ;)

" link building on an ongoing basis"

exactly. You have to.

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I have been following this "position 6 penalty" but have not seen it in affect in any of the niches I watch. Anyone know of an example site they think has gotten hit by it?

We haven't been hit with it yet on our core terms, but I'm watching too.  Another vote for promotion and appropriate link building.  If you're not doing that, you're in a constant on-page optimization contest that eventually turns into a zero sum game for all but 10 sites.

I saw a question on a forum that made me smile.  A member there wanted to know how to buy an edu link.  Not an edu in front of a country's TLD, but the straight edu link. 

At some point, the linking weight must be reduced.  There are already too many gray (okay, dark gray) ways to manipulate your way into links that pass a lot of juice.

I am never a fan of such 'penalties' as there simply is never a large enough of a sampling on specific effects. It becomes a game of supposition