Many links in this thread. Here's a summary of them.
Penn rubbed owner Paul Allen the wrong way in the draft war room that netted Greg Oden in June 2008. But then why would Allen give Penn a raise and promotion in May 2009. Something more recent must have been the last straw. Vulcan headquarters was livid in August 2009 after they realized Penn played them in getting a raise and promotion out of the phantom Minnesota offer.
Dunleavy was fired as the Clippers GM a couple of weeks ago. Penn says he hasn't pursued jobs with other teams since Minnesota. But he was, with the Clippers (high draft pick, lots of cap space). He used the wrong channels and got ratted out. Penn knows the Blazer draft board, free agents we want, and Pritchard's favored offseason trades. Penn has too much intimate Blazer knowledge to let him walk to a conference competitor before the draft. So maybe Paul Allen feared that Penn was letting out secrets (accidentally or on purpose) in his backchannel communications with the Clippers to secure a job (beginning either before or after the draft). But here's an argument against the theory that he was planning to leave for the Clippers--He wouldn't have left till after the draft. So he would have been fired after the draft, not before.
Penn, Pritchard, and ex-Blazers GM John Nash all have the same agent, Warren Legarie, who has been involved with the Clippers extensively. Pritchard helped Penn leverage a raise by declining the Minny GM job. Pritchard expected to get a new deal, too. Ownership emphatically declined, followed by front office unrest for months. Penn has been scouting this week with Pritchard. Pritchard knows Penn is in trouble, and the relationship has become strained. Pritchard, his good buddy, was unable to save Penn.