New major algo changes coming from Google?

Watching the hand-wringing over the next PR update, and the record amount of time that Google has waited to make this update makes me wonder how large the algorithm change will be in this update. Some clues:

• Many websites are being dropped from the index, only to reappear several days later. This indicates that the Google engineers are testing a new piece of the algorithm to see how it affects certain websites.
• Matt Cutts' indications that the Big 'G will be cracking down on paid links - it's almost certain that a large algo change will be implemented in an attempt to curtail the power of compensated links.
• The simple length of time between this update and the last update, showing that they are doing some substantial testing before deploying the new updates.
• Huge SERP movements up and down - I've seen this on a number of my sites that have had stable SERP rankings over the last year.
• The rapidity of backlink updates in the webmaster tools. I know that this is an ongoing thing, but I've had 3 major BL updates since the beginning of August.
• The "directory penalty". This isn't something that's been advertised, but I believe that Google will, if not completely penalize, at least downgrade links from directories so that they have less power. In my webmaster tools, I show very few links from directories, whereas I had thousands of them as late as June.
  
• More of a focus on "authority site" links that are naturally positioned. Again, this is a fight against paid links. (although I have seen an increasing # of authority sites selling text links in the last few weeks)

Each of these taken one by one don't indicate anything different from Google's normal practice of incremental changes and algo updates. Taken all together, they show indications of a MAJOR algo change.

Webmasters get ready - the next few months could be a headache if you're not ready.