tedster - 11:33 pm on Jul 31, 2010 (gmt 0)
There are a few ways of looking at this:
1. What are the engineers at Google trying to do
2. What are they saying publicly
3. What is the reality right now
We know that Google's pubic statements discourage link exchange practices. But they don't say you will definitely be penalized, not for reciprocal links and not for appearing in a directory. If the directory is specifically dedicated to link exchanges, and it's online for the purpose of improved ranking - then there's a good chance you'll get no Google value out of it.
If it's a paid service that publishes any website that pays, you are on the edge of a penalty. You are also giving Google a clear signal that you want to manipulate the search results. If you do start to rank on a competitive phrase, odds are you will geet a manual inspection and they won't like this part of what they see.
Still, in many cases, these practices are creating links that just get discounted, in my opinion. Reciprocal links were around before Google was around, and they appear to be helpful, within a certain limit.
If you really want to compete on high value searches, then you'll need some links from good sites who really like your offering and want to show it to their visitors. That's what it takes. There is no magic method that works for very long except for getting those high quality links.