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Wait, they can take a vehicle, unless I am misremembering, and anything can be stuffed inside a valkdetta.

I actually ran a list today of nothing but penal legionares. 4 squads of them for a fun list. In this case I played eldar, and everything had a job. The vendettas were to pulp the avatar and transports. The Leman russ was to provide the supporting fire so the eldar didn't get to daring in movement. The commander was to assassinate the farseer. The penal legionares were to scream bloody murder, soil themselves, foam at the mouth, and shank everything that was a warlock, fire dragon, or guardian. They did very well.

Lessions learned form this game. They will tie up a superior fighting force for multiple turns before running or die. They will win more ofter then not against an equal fighting force due to the fact that they don't leave, so they keep fighting. They will roll up inferior fighting forces within the turn they charge, due to high number of hits or high strength hits. As well they guard things very well, and will handily eat up firepower as it comes without moving, hence effective objective holding. For larger games (and, while no offense is intended, more tactically minded players) they should not be the backbone of your army, they are effective as an emergency response unit to infantry threats, because they do well at slowing things down and not wavering.