Judging from the email you copied to me it appears that the U of O Senate is just beginning to address the issue of sanctions for individuals who continually receive poor evaluations on post-tenure review. OSU Faculty Senate dealt with this spring and fall of 98 and came up with a document that makes that best of a potentially damaging situation. For one thing, instead of even attempting to codify any type of sanctions, the adopted "Guideline" ( http://osu.orst.edu/dept/senate/tfoptr.htm ) specifically leaves the establishment of sanctions to the individual academic units.
The "reduction in pay" issue that you and, apparently, the U of O have focussed upon is mentioned as only one possible sanction to be considered. It is not, nor is any other sanction, specifically recommended any where in the document, and from a reasonable person's perspective "reduction in pay" sure beats "termination for cause," which has been around as a sanction for years. The lack of mention of any possible sanctions would make the Guidelines hollow and more subject to fiddling with by the Legislature.
Perhaps I'm being too sanguine about this issue, but I forsee no change in the way we currently do business. I see the document as a reasonable response to the to widening pressures in most states to restrict or even abolish tenure. In this regard it is interesting to note that the Legislature again attempted to abolish tenure this past session, but according to Kevin McCann, OSU Community and Government Relations Director, "A bill to abolish faculty tenure went through the hearing process. The House Education Committee recognized that, if adopted, it would be absolutely disastrous to the higher ed system. The current opinion is that this bill will not be seen again." ( http://osu.orst.edu/dept/senate/min399.htm)
The reason that the Guidelines took about a year to get through the Faculty Senate was due to the kinds of objections that you raised. Faculty all over campus had a chance for input and plenty was given. The AAUP weighed in heavily with its views ( http://www.physics.orst.edu/~aaup/#NEWS). Although there are aspects of the Guidlines that are going to pose hardships on all (e.g., the requirement for 5-year peer reviews) the tone of the OSU document is positive -- it seeks to find ways to support and help faculty who get poor reviews as the first response; punitive responses come after else has failed.
John