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I am told one of the reasons for playing penalty doubles at the 2level is to punish the opps who get into the auction on thin air.
My thinking is they are more likely to do this when NV than V so we would want to retain the penalty double here and use the negative double to compete when they have made a vulnerable overcall.
...but turning +50 into +100 isnt what gets you rich (well, sometimes your side makes exactly 90); turning +100 into +200 does, anytime you don't have a game-going hand; if I had to play penalty only half the time I'd play it when they are vulnerable (at matchpoints.)
I personally prefer to play it penalty all the time. I know the folk on the forum who spend all day playing expert-level opps say that there aren't many penalties to be had; at the club level there are.
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But when you have a hand like yours (which is somewhat more common than the penalty double hand) a takeout double is a big advantage
IMO the "hand like yours" - strong enough to want to compete, short in their suit, AND has no bid - is a very rare one (the posted example, and its slightly weaker cousins) is a great deal *less* common than the penalty double hands (which can include a wide array of balanced 6-8 counts as well as a bunch of game-strength hands that have the opps' suit covered.)
On the actual posted hand, with 8HCP and the -98 sequences, I probably would have stretched to bid 3S, rather than settled for pass.