As far as recruiting, I think Penn State will be fine, especially for the top kids. There is a lot less competition for playing time now, and it is still Penn State and the guys across the line are still Ohio State, Michigan, Wisconsin, Michigan State, etc. I also think the perception of a "harsh penalty" will reduce the Sandusky stigma that would have otherwise been associated with the program. It gives the perception that Penn State will have paid its debt to society. I am sure that was deliberate by both the school and NCAA to enable Penn State to come out of this on their feet.
Even with the reduced scholarship number, Penn State will be a very attractive destination for top recruits in the Northeast.