I know it seems like hype and excuses, but it cant be said enough how much those knee injuries and surgeries got him right when he was at the cusp of reaching his actual prime at 25/26. In 97 when he switched to shooting guard in the playoffs and the following season at the start, you could see he could easily be a 25-30ppg scorer like he was when Shaq was out.
Even in Phoenix his first year and his 3rd year coming back for the first 20 games or so he was an effective 17-20ppg scorer while playing SG/PG with Kidd and Starbury.
Definetly SG was his natural position but he was effective at PG and SF too. The early explination for his assists only being 7 per game in Orlando was that often when he dished it to Shaq dude would get fouled at the line and The Magic's movement on the perimeter was pretty heavy for the 3s. But he definetly had court vision and to set up plays with those weapons. Same deal in Phoenix when Kidd was out during the end of the 99-00 season.
You could say there was a knock on him being too unselfish which was a problem particularly in 96-97, 98-99 and his first year in Phoenix when he was deferring to others. If anything would have held him back other than injury it would have been that when people wanted him to take on the team's volume scoring, he would set others up. But in the Playoffs he really did (Particularly the 97 and 2000 Playoffs)
Keep in mind during this stretch he has 4 microfacture knee surgeries in 2 years (then still an underdeveloped procedure compared to now) and is trying to rush back in certain instances (96 and 97)
No question Tim Hardaway is the better player having been more healthy and achieveing a lot but I dont think anyone should doubt Penny would have been right there with Hill, Timmy, Kidd, GP, Houston and Stack well into the late 90s/early 2000s.