I'd tend to think that Google's technology can detect this type of stuff. In reading the various patents Google has filed for over the years, this stuff should be easy for them to filter for.
There is much more to what Matt wrote and just focusing on this one bit would be an injustice just as it is claimed that Google is penalizing sites for this. There are going to be many other factors involved. If a site is using the strategies that Matt gives examples of, there are surely other signals throughout the site that would be filtered for.
What's happening here is those who have been heavily involved in irrelevant and relevant reciprocal link exchanges are feeling the pain right now. I mean, come on, one look at some of the site examples given and there are visible signs (footprints) all over the place. Look behind the scenes and it smacks you in the face.
This is what happens when you base your online campaigns solely on links, it's a risky strategy these days. Sure, it works, but for how long? For some, they may go undetected for years. For others, they will get caught up in the mass filtering that search engines will and are using. Google just happens to be leading the pack in this area and it probably won't be long before the others follow suit. That seems to be the natural progression, Google does something, then the others follow in some instances. Follow the leader.
P.S. If this is a scare tactic from Google, it's a pretty good one. Much of what Matt wrote aligns with documentation available out there supporting the claims.