I've ordered from Penguin on several occasions -- mostly dealer items that I imagine they get through Murphy's, like most other magic stores. For those who don't understand this, when Penguin deeply discounts, they are cutting their own margin. The creater gets the same amount of money as he or she would have gotten if the item was purchased through Hocus Pocus or a brick-and-mortar store. I've bought things like the AOA series and, yes, "The Trilogy," at discounts that induced me to buy them. I always go for free shipping, and, honestly, I don't see how Penguin stays in business. My last purchase of one of the AOA books came with over $10 postage showing on the label even though I paid nothing for the shipping.
There is, I know, a broader argument about Penguin's discounting policies that's similar to the debate over Wal-Mart's effect on local merchants in the towns they are located in. (Unlike Wal-Mart, however, I don't believe Penguin pressures manufacturers to produce at lower margins).
I've also bought many items directly from the creator (including specialty boutiques like Outlaw Effects) to support them. One of my big annoyances is when I've pre-ordered from the creator and then Penguin, HP and all the other stores get the item first and the reviews start showing up on the Magic Cafe before I've received mine... but that's for another thread.
In short, my experience with Penguin has been fine, the customer service has been good, and the free shipping has been very fast. As for knock-offs and Magic Makers stuff, yes, they have some... as does Fantasma, my local brick-and-mortar, and tons of other shops. I don't buy them from Penguin or anywhere else. And as various threads here attest, knock-offs can be defined in many ways and found in many places.