Reno - 2:49 am on Oct 14, 2011 (gmt 0)
Robert, here is what I would have liked for Google to have come out and say, clearly and unambiguously, all those years ago:
"Our algorithm is in large part based on PageRank, and PR is in large part based on the links that point to you. Because that is fundamental, we take link exchanges very seriously. Therefore any link exchange that you undertake that we determine to be contrived will not receive any PR benefit whatsoever, NOR WILL IT BE USED AGAINST YOU."
Something to that effect would have allowed the long practiced tradition of link exchanging to stay vibrant, and simultaneously, it put everyone on notice that there was every likelihood that it would not move you so much as one position higher in the SERPs.
Clarity of course is not their strong suit ~ FUD is ~ so as I said, people err on the side of caution and do nothing... all because of fear of what might happen.