Can linking to sites that host illegal content be illegal?

Factual Questions
#1

I’ve seen many of sites on the internet shut down for this but can’t seem to wrap my head around it. It’s usually a case where a community-like environment offers it’s users the options to post links to other sites that host full-length movies and TV shows.

Is this for real, or are these just cases where the little guy doesn’t stand a chance? It seems the bigger sites/companies who actually host the content never seem to get shut down or imprisoned, rather they get a warning to remove the content, but those people running a site that links to those sites end up in jail. :confused:

What’s the deal? and more importantly, what’s the deal-breaker?

#2

The law on this subject isn’t well-settled.

Here is a discussion of the cases: http://www.chillingeffects.org/linking/faq.cgi#QID152

And a discussion of two recent verdicts: http://arstechnica.com/tech-policy/news/2008/05/linking-to-movies-leads-to-4-million-in-fines.ars

These cases mostly involve:

  1. Links to DRM circumvention devices, which get special legal treatment; or
  2. Sites whose main purpose is to provide links to infringing copies.