Your account of what happened at PSU is not quite right. The shower/McQueary incident occurred on a Friday night. He went home to his Dad and doctor friend. That's when they asked him, I believe three times, if he witness Sandusky having s e xual relations with the kid in the shower to which said 'no'. The next morning he told Paterno. You are correct that he didn't describe a rape out of respect for the old man, but he described it as something s e xual. Paterno then looks up in the university handbook what he is supposed to do about such a report which apparently says to notify your supervisor, in this case the athletic director. McQueary then meets with the athletic director and the VP of finance who also happened to be the top administrator for the police department. These two guys both steadfastly claim McQueary described horseplay or goofing around in the shower. A few weeks later Paterno asks McQueary if he was OK with how everything turned out to which he replied he was satisfied.
At this point, in Paterno's mind, the incident is a closed matter. He reported the incident, which he received second hand mind you, up the chain of command to people that would be better equipped to handle an investigation as University policy required, and the person that initially reported it to him said he was fine with how it was being dealt with. I have to ask myself, WTF else was he supposed to do? For all he knew McQueary misinterpreted splashing in the shower for something s e xual, because we know he never actually saw anything, and it was being taken care of by those in charge of the school. Furthermore McQueary out golfing with Sandusky multiple times after the shower incident and being buddy buddy enough to consult with him about recruits lends credence that McQueary himself knows he was mistaken, unless he's cool with rubbing elbows with someone he knew to be a child rapist. Even if there was a cover up, how would Paterno know it and why would he suspect it of people in charge at the school that he had known for years? It's not as if he saw Sandusky raping a kid and then realized those above him were sweeping it under the rug. If anything he would have thought there was no merit to McQueary's claim. He received a vague report and passed it along. A report that he could not possibly know whether it was true or not. He's a football coach, not some superhero with extrasensory perception. The president of the school was only ever peripherally involved, so it's a bit of a stretch to try to pin anything on him.
There was also no testimony from the victim, so the whole case hinged on McQueary's changing story and "slapping sounds in the shower" vs. Sandusky's word, and no jury is going to ever completely acquit a person they had been told for six months was a pedophile (hence the reason leaking grand jury details ahead of a trial is a crime). The only way to make this huge cover up and conspiracy work in the face of what McQueary told people at the time and the overwhelming evidence of his behavior afterwards is to yank on your tin foil hat as tight as you can because you really have to weave a complicated tale to make it all work the way it was initially sold to all of us.
Having researched a fair amount on my own, I myself prefer the simpler and more likely explanation. What the NCAA did worries me that they could do it to my alma matre at some point in the future, because apparently you only need to be sufficiently embarrassed to enter into something like the consent decree that PSU was forced into signing. Today that threshold is set at an ex-coach inappropriately touching a kid in the shower, tomorrow it's __________.