"...Internal anchor text (linking within your site) is rarely penalized."

I agree that it's rarely penalized, but based on some things I'm seeing, I think a site with exceptionally high percentages of exact match internal anchor text links to category pages can (perhaps unintentionally) be caught in the Penguin net. Not conclusive just yet, but it really looks like this is the case with a site I'm working on.

The term "collateral damage" comes to mind.