does the penalty passes when you redirect Site A (the one the got hit) to Site B?
It should in theory but it depends on Google and how it reacts to Site B.
Often times, Google will not fix a problem or issue, so if a site gets penalized, it is pretty much over.
It's not "over". Cutts just said at some conference that both penguin and panda are definitely algorithmic updates, and not filters. Don't know if he's lying but apparently its possible to recover from penguin.
I have an alternative for removing the 301? did you try DF?