I have asked Jeff to look at this thread so the ball is in his court.
To clarify what I was meaning see
http://www.google.com/support/webmas...n&answer=66356
Here is a quote of the first part:
Link schemes
Your site's ranking in Google search results is partly based on analysis of those sites that link to you. The quantity, quality, and relevance of links count towards your rating. The sites that link to you can provide context about the subject matter of your site, and can indicate its quality and popularity.
However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites.
This is in violation of Google's webmaster guidelines and can negatively impact your site's ranking in search results. Examples of link schemes can include:
Links intended to manipulate PageRank
Links to web spammers or bad neighborhoods on the web
Excessive reciprocal links or excessive link exchanging ("Link to me and I'll link to you.")
Buying or selling links that pass PageRank