aristotle - 10:51 pm on Jun 5, 2012 (gmt 0)
If the website is paying for editorial staff to review the site - and therefore the entry can still be turned down if it's not up to editorial standards - that is NOT considered a paid link. If the directory accepts every site that pays them, then that IS considered a paid link.
I think the distinction would be unnessary if Google would simply devalue all links from dirctories. People could then buy all the directory links they want without having to worry about a penalty. And webmasters with money to spend wouldn't gain any advantage in Google's SERPs from buying directory links.