Since my thread is one of the ones I suspect inspired this one, I figured I'd reply.
We've worked on bullying a lot with my boys; particularly since my older boy was quite a big larger than other kids his age when he was younger (it has since evened out as he's gotten older). He knew in no uncertain terms he was not to use his size to intimidate other kids into getting his way. It became more complicated when smaller kids started targeting him because they learned he wouldn't fight back; he came home one day with a black eye and a bruise over his kidney from a neighborhood kid who beat him up because my son wouldn't let him take his (my son's) bike. Dad had a long talk with him about the difference between defending yourself and intimidating others. So I guess I go along with disneyjunkie in that regard; if a kid is being attacked, he can fight back. It does no one any good to teach our children to be victims.
Regarding verbal intimidation, I agree it can be just as damaging, if not moreso--particularly with girls, their cruelty is truly unbelievable at times. (For that, I'm grateful I have boys.) In our case, another child verbally attacked my son with an abusive note. He defended himself by writing that the words the kid wrote down described himself. I don't think he was being a bully in turning that kid's words around on himself, although we did have a talk about not getting drawn into these kinds of exchanges (ignore the note, avoid that kid).
So, I guess I draw the line with my kids on being the attacker. It's totally unacceptable in our family. Defending yourself, within reason (for example, I wouldn't condone my bigger and older son pummeling a kid who attacked him beyond just getting the attack to stop), is okay, although I largely prefer they avoid situations where that would happen in the first place. (Hence the avoiding kids you don't get along with advice.)