That is about as close to a death penalty as you can get. At first glance I wasn't in favor of punishing them under the "institutional control" umbrella, but when you realize at what levels of leadership not only knew about it but actively tried and did for the most part cover it up then yes, something needed to be done. I do think they (NCAA) went a little overboard with it however. I'm pretty neutral as far as PSU goes but they are one of those things were CFB is better with them around. It will be a very long time before they are "around" again.
Clearly the death penalty was avoided in large part because of the devastating impact it would have had on the State College community. The NCAA and PSU didn't want the responsibility of destroying a local economy. PSU had no option but to accept any sanctions the NCAA was going to throw at them.