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Matt pulled me over in the pub this afternoon and made some clarifications - and indeed, I did not have this exactly right. Matt said that Google will make it HARDER to get that 3rd result in a given search, and then increasingly harder for every result after that. But it will not be the exact same treatment that subdirectories get.
Michael McDonald from WebProNews did a video interview with Matt right after our conversation, and I understand that gets into more detail on this topic. So the clarification will be there for us all as soon as the video is published.
My apology for not getting all the details straight before posting.
This is the kind of real-world experience that might get me back into the whole "2.0" thing. I guess I was too early an adopter, but I wasn't getting enough payback from the whoe arena so I faded away.
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Story: Who's Tedster? If You're an SEO, You Should Know