But an algorithm that has the ability to penalise a website/business based on the type/amount of inbound link profile clearly would never work because of the nature of negative SEO...
It seems that ranking factors can now be based on (amongst many other factors):
- your internal link profile
- your inbound link profile
- the quality of the links inbound to your site
- the quality of the inbound link profile(s) from the websites linking into your site
- the external links on your site
- the quality of the sites you are externally linking to.
As far as I know a huge amount of bad links will only hurt you if you don't have any good links or any history.
The rest of your list seems like a fair assessment. If you [not you personally] have suffered a loss in rankings then it is very likely that the poor quality links that we all go and get because they give you a slight advantage no longer have any value. I don't think it's any more complicated than that and all that is needed to recover is to get good links instead?
Easier said than done if you're just out to make money from search traffic but not impossible.