I know that when I took on a role of authority in my school and I had to sit through those legally required classes when you deal with children, what they kept telling us was, "If you see something, report it to your superior". Thankfully, I was never in that situation, but had I been, I probably would have followed what they drilled into our heads because that is what they told us to do. Maybe they should be telling us to call the cops immediately, but until they do, I don't think it should be my fault when I followed the law and reported it to my superior, just because my superior then failed to report it to authorities.
Having said that, I wouldn't stand by for a decade knowing that things are still going on just because I reported it to my supervisor. That is why there are a few things we need to know before making judgements on Paterno's actions.
What exactly was he told by Mcqueary?
What exactly did he tell the AD?
What did he know about AD not doing anything about the allegations for 10 years?
The grand jury testimony regarding those questions is inconsistent at best. I think that until we have answers to those questions, we don't know enough to judge whether he is at fault. The AD and President on the other hand withheld information and should be held responsible.