This is microcosm of went wrong at Penn State. They had a culture that put loyalty to the team over loyalty to principle so a mob mentality developed.
Paterno shook his head initially showing displeasure over the QB's actions but he also felt as a coach he should support his player.
2 principles were at odds:
1.) Don't run up the score and make the other team look bad
2.) Support your players and stand by the team
Paterno couldn't do both, a little moral dilemma. He choose to do 1. Not a big deal in this situation, but a big deal in the other situation with his DC where once again he choose loyalty, standing by his coach, over another principle. Shows that loyalty to people can be problem because it forces you in situation to go along with the crowd when you know what you are doing is wrong.