Note: yes, it is true, Barry is 'The Other Bloke', not to be confused with 'The Bloke', whoever he might be...
I happen to have been one of those who totally ignored rel=nofollow and find the current brouhaha hysterically funny.
Let's do a historical recap (taking a very bogbasic view of PageRank):
BNF (Before NoFollow):
* Each and every link to a page (internal or external) brought some portion of the referring page's value with it.
* Each and every link out from a page (internal or external) took away some portion of the that page's value.
NF1.0 (NoFollow version 1.0 aka Blog Comment NoFollow
* Knowing the historical value of BNF and having ravaged, plundered, and pillaged guestbooks into oblivion PR seeking linkdropping spammers descended onto the riches of unmoderated blog comments.
* In an implicit admission of abject failure in algo/auto determining copy quality and being unwilling to abandon blog comments as they had guestbooks SEs invented the 'link condom' or rel=nofollow.
* And so the great 'dofollow' goldrush began.
NF2.0 (NoFollow version 2.0 aka LinkSculpting via NoFollow)
* A few smart folks realised, all things PR being equal, that with PR being dammed up behind NoFollow it created 'reservoirs' of PR and that by carefully blocking and channelling onsite links could build controllable reservoirs and PR 'irrigation'.
* A few foolish folks shared this idea publically.
* Unofficially, the SEs sort of shrugged.
* And the great LinkSculpting goldrush was on.
NFEE (NoFollow Extinction Event)
* Unofficially the SEs began to talk back their unofficial LinkSculpting shrug. Almost no one noticed, fewer cared, even fewer commented.
* Eventually, in answer to a direct question Matt Cutts implicitly said that LinkSculpting had no value. Given the fortunes/reputations made through the promoting and sale of LS this caused a great shock within that portion of the webdev community and Mr. Cutts' words were parsed for any justifications for their past LS touting.
* And finally Mr. Cutts point blank stated that each NF killed that links PR value portion dead - and worst of all, had done so for over a year. And no one had (publicly) noticed.
ANF (After NoFollow)
* A lot of people have been wailing and running about shrieking that the sky has fallen. Some, for varying reasons, have loudly demanded that Google put it back up or otherwise compensate for their bubble bursting.
What has occurred is that external link value has gone back to what it was BeforeNoFollow: without NF the link carries away it's portion of page value as it ever has, with NF the value is simply extinguished. Back to link value as usual for external links.
Internal LinkSculpting is the biggest loser. Before value simply flowed. It might eddy or sit in backwaters but it never died. But now all that fancy reserviour building and controlled irrigation is seen as actually diminishing page values. Big Woops. Amusingly (publicly) no one apparently noticed. Even Bigger Woops.
Why the silent change is uncertain - the backlash is likely (as Barry has noted) to especially impact blog comments as currently structured. Have the SEs' ability to judge copy quality improved? Had LinkSculpting broadly impacted the SEs access to content they wanted? (I see implicit acknowledgement of this in one small explicit Matt Cutts sentence)
Barry highlighted the most important short term blog comment consideration - in the balance between added content value versus outgoing link drain value the quality of the comments becomes paramount. (Of course, best practice has always implied that but most bloggers aren't exactly enamoured of best practices) The quick fix is gone, moderation remains. What percentage of bloggers will put in the time and effort - will it be seen as necessary?
Structurally it just may force a greater appreciation for site architecture. Because all that LinkSculpting could do so can a proper architecture. Of course the one is more expensive (time and effort) even from scratch, fixing existing monstrosities becomes a nasty cost/benefit exercise.
And sitting here, cozy, the tempest blows. And so many are out there getting wet. Sillies. That's what you get for chasing SE prognostications. Bubble and burst. Welcome to the down side.
Regardless of your pov, read