It's amazing to think that Google can compare EVERY sentence versus every OTHER sentence it has indexed, and then decide who the "legitimate" owners are.
Most of what is "common knowledge" of what Google "does" is likely just FUD: fear, uncertainty, and doubt.
Look at Google ITSELF, for example. They run
http://news.google.com right? Isn't that just RSS feeds? Isn't it duplicate content?
Look at Autoblogger sites as another example. Clearly, customers rank highly in SERPs, clearly Bliggo betas have kicked ass and taken names, and clearly, the majority of content from THOSE sites is pulled from feeds.
It just doesn't add up, in my opinion. Your results may vary, but mine have been very good using what others complain may be "duplicate content."
Hope that helps.