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Phil Ringnalda explores some of the implications of nofollow down the rabbit hole:

On the other hand, if nofollowed links count against link numbers, but then drop their allocated PageRank on the floor, then Google and friends have handed weblogs a pretty poison pill. If your entry has three internal navigation links, a link in the body of the post, and twenty comments amounting to thirty nofollowed links between links in the comments and commenter URLs, then rather than split that page's PR in four pieces, Google will split it 34 pieces, three for you, one for the site you linked to, and 30 that it essentially keeps for itself.

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