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Yet, after reading through all the discussions here, I'm also a bit leery of using an off-the-shelf (purchased, not free) software product. If I do this, is my directory in danger of being viewed by search engines as a link farm simply because I'm using packaged software (that others are using to build reciprocals)? Or will it be evident to search engines that this is a worthwhile directory based on its one way links?
Or am I completely muddled by this whole topic?
You may have noticed in other threads that a common word of advise is "you are who you link to" and this is true and good advise.
Use a software that allows you to control organization through categorization. If you focus on quality control, you don't need to worry about search engines seeing your directory as a link farm. The term "link farm" gets thrown around quite a bit without many defining it. A link farm can be defined as a group of webpages that lists exit links in high volume and with low relevancy usually of little quality for the end user, and are sometimes computer generated (full duplex link exchange).
Maintain editorial control and produce a directory that is useful for end users and you should have little to worry about.