I'm not as worried a about reciprocity as some people are, if two sites compliment each other then why not link? It's link farming, mass bought links and heavy linking within a group of domains tha have caused problems at various times in Google.
Amen. It's when you start to abuse linking that you run into trouble. If you're trading links to serve your site visitors, that's great. But when you do it just to increase PR, bump yourself in the SERPs, etc. ... not great.