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If you redirect site b to site a now, you will be passing along the negative effects of the penalties. Site a no longer exists in the search world if your redirect is that old. The best thing to do would be to fix the penalties, disavow bad links and submit a reconsideration request. Redirecting site b to site a would mean starting all over, and you would still have to deal with the penalties or site a won't rank at all. I suppose you could just kill site b, and make site a live again. You would still be starting over with site a, either way.

I think that Google holds more weight on the number of linking root domains to your site as a ranking factor. That being said I think internal vs external links within the site is another important ranking factor that would need to be reviewed. It's hard to say whether Google is using that information or not, and if it is, it would be difficult to know how much weight Google puts on it. I would suggest you look into link relationships http://gmpg.org/xfn/intro for your site links. It has been hinted that Google may start using XFN relationship tags in its algorithm and it wouldn't hurt to add these to links where relevant.