The problem is, Sandusky was still allowed to hang around. he was still allowed to bring boys over. He was still tied to Second Mile (as was Paterno). It was obvious that nothing was done about him. Ever think a follow-up might be in order? Did Paterno not have the power to at the very least kick Sandusky off the campus?
If the university investigated and decided that Mike McQueary was mistaken in what he saw, then nothing would have happened. Knowing what we do today, we have every reason to believe that Mike McQueary saw what he claims, but Joe Paterno wouldn't have known that at the time. If he saw Sandusky still using the facilities, he would have assumed that the accusation turned out to be wrong. If the investigation turned up that McQueary had lied about the whole thing, then the only disciplinary action may have been against McQueary and again, no one would have told Joe Paterno.
Until last fall, Second Mile was a respected charity in Pennsylvania. The university would have wanted to work with a respected charity that was doing good things for disadvantaged kids. If McQueary's story was so full of holes that they still didn't suspect Sandusky, then they wouldn't want to dump a respected charity on the basis of what seemed at the time to be a flimsy rumor.
No, I don't think Joe Paterno had the power to kick anyone off the campus. Why would any school give that power to a football coach? Even if Joe Paterno had the prestige to bend the rules and have things done the way he wanted, his history shows that he wasn't the type of guy who always wanted to bend the rules to exercise personal power. He had hearsay testimony about something that happened. He never pretended to be a criminal investigator. He turned over the information to those who were supposed to be qualified to investigate.
The story that Mike McQueary brought to Joe Paterno was weaker than the accusations that Anita Hill made against Clarence Thomas. We've now learned things that suggested that McQueary may have been right while most of us believe Hill was lying, but at the time, Joe Paterno had no way to know these things. Do you go on crusades against individuals based on such poor evidence? I don't.