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Does this incur a penalty in Google's eye? and why? how then would you link between a network of sites?
The thing to keep in mind is that you need a ratio where that type of linking is in the minority, not the majority. The ratio can be higher with Google than Yahoo. If you go the slightest bit to far with Yahoo you will suffer the dreaded penalty.
It isn't fair at all when you think of how you may need to link to all your sites because you have the following type websites:
Free baby shower planning ideas
Baby shower party supplies
baby Shower cake supplies
Baby shower party favors
Yet yahoo will hate you for it, I know that personally after fighting with them back and forth.
We don't even think about listing or using yahoo.