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If that descripts the situation there are no problems with linking to those kind of sites. If they have good content you will be providing your visitors access to that content before other sites have discovered it. That kind of content can help make your site unique and/or cool in a world of a billion other websites.
What many people want to avoid linking to is what google has termed bad neighborhood. Those normally are clusters of sites which have all linked togeather to form a pagerank feedback loop. I would suggest in their worst form they have many pages, little content, and no links outside of their island on the internet, very few incoming links from non feedback sites, and not likely to have any links from an authority hub. Mapping the web spots them.
Those bad neighborhood may have a penalty which gives them the rating of PR0 even though they have lots of incoming links.
The problem is linking to a bad neighborhood may make you look like a member. Even more so if that neighborhood links back to you. If you become a member by linking you may get a penalty. The rules for becoming a member of a bad neighborhood has never been published. So you can only guess at what it takes to become a member. But I think its a safe bet that you must link to them ... if the only thing that was needed was them linking to you than I am sure there would be some SEOs running bad neighborhoods so they can link to the sites that are above them in the SERPs.
But you don't get a penalty for linking to a PR0 page. But maybe by linking to a bad neighborhood.
On the other hand, penalties are applied as mentioned via bad neighbourhoods - but those ones are usually restricted to pretty bad cases of spam from what I've seen.
Since we are talking in terms of PR1 and PR0, maybe you should call into question the "link partnership".
Ideally, everyone would link "naturally" regardless of pagerank and it could be entirely possible that you have been penalised yourselves due to the low PR you have mentioned. Hope I'm not scaremongering with this last statement....you may want to try searching for the site you link to with alltheweb to see what sites also link to them (and assess whether you think they are "dodgy" or not).
The return link is nearly worthless to your pagerank if it is that low, unless you believe they have a future.
Can you identify significantly higher PR pages that link to the PR1 page that you link to? If not then there's no real reason to suspect that they have been penalised either.
If you can find these higher PR pages, and they have linked for more than a couple of months, then it's worth looking at the link structure in more detail. You might be able to identify a particular page that can't accept PageRank, or one that has PageRank but cannot pass it on.
