When You Have Bad Links Impacting Your Google Rankings, Which Do You Remove?

I see this all the time, a forum thread, where a webmaster knows his rankings are suffering in Google because he was hit by Penguin because he has a lot of really bad, manipulative links. A WebmasterWorld thread sums up the issues a webmaster in this predicament is in.(1) They hired an SEO company (2) That SEO company ranked them well for years (3) Then Penguin smashed their links (4) They no longer rank as well (5) They are upset with the SEO company (6) They need to figure out how to rank again (7) Removing the links are the only option (8) But removing links that were the result of their initial good rankings won't help them rank immediately
In this thread, the site owner sums it up as:

1) What is the sure proof way to make sure a link is 100% bad? 2) I don't want to remove all links cause I am worried my site will drop even more. I'm sure there are some semi-good links that might be helping.
3) After submitting disavow file, typically how long does it take to recover? We have two sites, one seems to be under penguin and panda updates and the other received a manual penalty for certain bad links for certain terms.

It is sad, indeed. But you need to disavow the links, that is for sure. Those links are not helping you and they are now hurting you. Remove the hurt. Then get people to link to you because they want to link to you.
But which links should you remove? Which links are actually hurting you. That is the hard question. One SEO offered his advice:

Black Hats Prepare To Spam Google's Author Authority Algorithm

For the past six-months, Google has been working on an algorithm to promote authorities on topics.In short, Google is going to try to figure out which authors or individuals are authorities on a specific topic and promote their content across any site, in some way. You can read more about it in the links above.
This morning, I spotted a thread at Black Hat World where "black hats" are seeking ways to exploit this algorithm by "faking" author authority.
This is how one explained it:

So Google now allows you to "tag" an author in your content. Good authors who are popular get extra ranking bonuses for their articles.So it seems very simple to me. Find a popular author in your niche, and tag him in your links to your content.
Extra link juice off someone else's work.