I think another thing that people are failing to take into account looking at the report in hindsight is that Sandusky was clearly a very good liar, and he was lying to a lot of people for a very long time. Also, people wanted to believe in him, which is exactly what enabled him to lie so well.
For example, the GA thought he saw something in the shower, so he runs off. Sandusky clearly convinced the upper level brass, and Paterno -- who, truth be told, probably wanted desperately to believe him -- that he was just horsing around with the kid in the shower, that what the GA thought he saw wasn't what he really saw. This would be seen as inappropriate enough to ban someone from the showers, but maybe as an administrator you decide that's as far as it needs to go.
Now, when you read the Grand Jury report and everything is laid out in black and white, it seems obvious that this guy should have been stopped. But we have the benefit of a lot of information these people didn't have at the time, nearly overwhelming testimony really. Just like with Herman Cain, where one anonymous victim seemed less credible, but now he's struggling to deny the claims made by four different women, two of whom are now known. Yet he's still trying.
This is exactly what makes Sandusky so awful. He used the fact that these boys were vulnerable and that people trusted him as a public figure to do it over and over again. He must on some level have felt invulnerable.
I think Joe Paterno should step down at the end of the year for a number of different reasons, the primary one being that it would be a good point of departure and healing for the program and university. But do I think this should forever completely taint him legacy as a coach or person? I'm not ready to make that call, yet. I would like to know more of what happened. I also think that even though he made a big mistake in judgment, that the good he did outweighed this one mistake-- the mistake really of believing in a friend too much.