tedster - 3:25 am on Oct 14, 2011 (gmt 0)
Here's another Google quote on the topic:
The reciprocal url often looks like a resource page. The links on the reciprocal url must be based on quality and subject relavency and not page rank basis alone.
As far as I have seen, it is webmasters who have created the FUD around this topic by reading too much into various Google comments over the years. In fact, the webmaster community creates a lot of SEO FUD by the time some original comment gets passed on in a second or third hand. We even see some of this distortion on this forum from time to time.
Anyone who has used reciprocal links in the way described above knows from their own experience that they do help and they don't cause penalties. When you get off-topic and off-quality reciprocals, they tend just to have no effect, in my experience.