does anyone know how the newsletter module handles bouncing emails? Is there some sort of self purging feature that unsubscribes the email address automatically?

The e-mail system is not so sophisticated - the table it uses it not part of the user table - just e-mail addresses.
 
It is very good for just sending news and messages but does not function as a complete newsletter system.
 
I export the user table into 'Group Mail' where I can have all the functionality I need - each week I just download the latest users and add to my Group Mail list.
 
Chris

We also use a 3rd party tool for newsletter sending which has a lot of infos re. bounces, read emails, clicked links, etc.
 
I'll dare post the link here: http://octeth.com/products/oempro

My Company use a software call Mass Mailing News, easy to use bulk email software. This bulk email software can send personalized message to each contact. You can manage the Opt-in, Opt-out and bounce back email as well.
 
You can read more from their Web site at: http://www.massmailingnews.com