Side 1: Joe Paterno has a moral obligation to report that somebody told him that they saw one of his assistant coaches raping a 10 year old boy in the shower at the team facility. While he may have fulfilled his legal obligations by reporting it to the University, it is unethical and completely wrong for him to not notify authorities. It is too serious and heinous an offense to keep quiet about or to simply report to the University and then go on as if nothing had happened.
Side 2: Joe Paterno did what the law requires him to do. It is not his place to notify authorities on hearsay, and it is the University who should be receiving the brunt of the blame here for not following through on what Joe Pa reported to them. He is being unjustly scape goated here for the horrible acts of one of his assistant coaches, and of his employer.
My initial stance was that of Side 2, but when it was actually role played on the radio this morning, and then we changed the names in the program I teach in at work so that each person involved was one of us, I almost immediately changed my mind to Side 1, where if I was Paterno in that instance I would have been compelled to notify the authorities.
So, who ya got?
vs. 

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