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[edited by: DaveAtIFG at 11:35 pm (utc) on April 8, 2004]
[edit reason] Removed off topic comments [/edit]
For example, I work for a gemtleman who sells vacuum cleaners and I handle all the web development and promotion.
We link to web sites of stores that service the floor in some way: carpeting, contractors, maid services, etc.
It does not hurt to exchange links with a competitor or two. Doing so makes you both higher in the search engines and you will both be higher than the other 1,000 that you don't link to. I know this sounds weird, but I believe one or two competitors exchanging links can't really hurt. Just make your web site better than their's. LOL