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Here's what I'd watch for (again, no idea if this helps or hurts, but it's what I'd watch for). Make sure all your sites are ontopic. Make sure all the sites have unique content. Make sure all the sites have their own relevant set of discrete backlinks - in other words make sure all the sites stand on their own. Then if you interlink, I think worst case is that you're telling Google you own all the sites. Best case you're telling Google that you can pass trust and relevance around the sites.
Just interlinking a bunch of same sites (i.e. 5 mostly the same copies of the same site) would make me nervous.
I don't think hurts, until it's pretty obvious that all the sites are yours and you are linking them for the purpose of getting links.
Just make sure when you inter link, you don't put the links of rest three sites on each site, giving 1 link would be best:
Site 1 Links to Site 2
Site 2 Links to Site 3
Site 3 Links to Site 4
Site 4 Links to Site 1
even 2 links on the same site should not be bad, but make sure it doesn't seem obvious.
(Circular could also be <> rather than one-way)
However, I think Wheel is right. Each site should have unique, related content and stand alone. Then, interlinking works. Why wouldn't it?
If there is duplication, you are effectively trying to get all sites ranked for the same content. This is unlikely to work without interlinking, and once you interlink, the bad smell (plagerism and/or scraping) gets passed around rather than the trust.
If there is no relation between sites, PR might get passed (but who cares about that, unless you're selling adverts or links), but ranking is unlikely to get a boost.
[edited by: Shaddows at 10:43 am (utc) on Oct. 29, 2008]
But these are large brand-name trusted, authoritative sites. The rules are likely different for smaller sites. We get away with a lot of things that smaller sites would never be able to get away with.
PS: I cornered Mr. Cutts at Pubcon last year about this very topic because I was wondering if there would be any sort of penalty for doing so. He said something to the affect that as long as each of the sites were distinct businesses with their own brand, it didn't matter that we were sharing the same IPs running out of the same datacenter. But again, this may only apply to larger brand sites. They may take a closer look at smaller sites doing similar things.
[edited by: ZydoSEO at 7:45 pm (utc) on Nov. 6, 2008]