My cousin and her husband are PSU alums, work for the school and live in State College. You're absolutely right about their defiant attitudes and misguided anger. My cousin is an intelligent woman who actually hates football, but is still defensive about the whole situation and believes pretty strongly that the Penn State community has been wronged.
Their view is that (a) The Freeh report has many flaws and is not based on undeniable fact, yet the media and general public ignores this, (b) those responsible for the "cover up" are all gone, either in prison, dead, or fired, (c) the NCAA's ruling is unfair to all who had nothing to do with the cover up and is merely creating more victims, (d) it will be five years before Penn State can begin to heal.
The one that really bothers me is (d), because it goes to show how ingrained the win-at-all-costs mentality is. They can start "healing" yesterday if they wanted to! But winning football games is so important that it is their belief that they can't start "healing" until they're winning 10 games a year and going to bowls again. And this coming from a woman who hates football. That to me is what blows my mind.
I love sports and am an extremely competitive person and root like hell for my teams to win every game. But this whole situation is a lesson to all sports fans that it is critical we keep perspective, recognize sports (especially at the amateur level) for what they are and hold basic values ahead of wins.