REW Tyler,

When you have done SEO for over 11 years you make friends and connections with people on the inside that the closest most will get is reading what they have to say in a blog, forum, or maybe in a seminar.

You'll also find that what works today can get you penalized or banned tomorrow.

Except for having Overture on my web properties I could really care less about Yahoo! So the "inside" information that is being relayed here comes from WebGuerilla.

In short, the reason for this penalty was confirmed by a Yahoo! employee and it was implemented by IP address. Over 32,000 AA template sites are on one IP and only a few survived. For example:
1) debbieferrari.com had been ranked #1 for years on Yahoo! for the term "orange county real estate." Today it is #189 even though it's attempting to comply.
2) phxrealestate.com, which is on the same IP, has not been been penalized and this is probably because their state pages are presented and named differently.
3) Ken Smith (suburbanhousehunters.com) is on the same IP and he uses the same naming convention as debbieferrari.com. There is nothing wrong with his state pages, but he's taken a hit.

Right now it's a penalty. Tomorrow the sites in the AA network that do not comply could be construed as a "bad neighborhood." You are getting a heads up. Take it, or leave it.