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Thanks, Branagan. This is what I meant by "..a little knowledge being dangerous..." I've been reading a lot here and there (plenty here in SEOMoz)  about the dangers of link exchanging and taking it as a hard and fast rule to never exchange links that is rather new due to recent Penguin updates. What I was missing was "excessive" or unnatural and that if it makes sense, is approached wisely and isn't done in bulk, it's still ok.