I'm not saying any of the above. The important point I want to get across is that Google regards reciprocal link strategies on the same level as link buying: They view it as link manipulation.
Understanding inherent risks and having a clear understanding of whether something is Google-approved or not is highly important before undertaking any promotional effort.
Up to now there has been some dispute as to how Google regarded reciprocal link strategies. Today there is no ambiguity. Google regards link exchange strategies as an unapproved method. Evidence of this has been mounting for the past year.
Should you take down your reciprocal links?
Don't fix what isn't broken.
DG, good point about how it's applied. It's one thing for Google to say they're against something and another thing for how they actually react to it.