Sounds to me like bloggers are the new journalists and that traditional media is in big big trouble.
It's not about old/new media - it's about hustle.
If this were the NYT they'd probably tell Arrington he couldn't run the story because it'd interfere with either their ad sales or else their access to sources. For example, just look at how/why they covered up their knowledge of the warrantless wiretapping until after Bush got reelected.
Whereas with Arrington there's no one to tell him he can't do it because it's his blog, and because he's not part of some mega corporation the chances of a story like this killing the revenue of some part of his empire are infinitely lower.
Journalism used to be considered the fourth branch of government, keeping the other branches and large institutions in check. Blogs are the startups of the journalism world.
As America moves from bureaucratic capitalism with large institutions to entrepreneurial capitalism with many small firms & independent players, the responsibility to call out unethical behavior is transferred from news companies to the individual.
Arrington did the right thing. It's not about whether he caught a criminal, it's about whether he prevented someone from becoming one.
I doubt that they will abandon their ethical choice; they'll find smarter ways to do what they'd intended all along.
One thing that might work is if someone in the group has damning correspondence, everyone will panic and promise to "never talk about that summer again," genuinely preventing future problems.
Either way he loses that/those source/s for future stories. He did the only thing he could do, besides staying silent. If it happened to be the right thing as well, so much the better.
more likely is that he doesn't want anyone to get in trouble, he's just putting them on notice.