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RIch, A lot of theory goes into link building because many aspects of it can be hard to measure consistently across the board and too many factors can come into play to even account for.  An exact answer to your question would need to take into account many factors which you have not described in your question.  What is the strength, age, authority of the domains?  Is there any relationship between those who have registered these two domains or do they own other domains together? What do their respective link profiles look like and recently, how have links been added to each domain? When you say "If two sites (follow)link to each other, clearly that does not offer any link juice.", your "clearly" isn't necessarily so.  For example, if a high domain authority site and a low domain authority site followed-linked to each other, the one might expect that the low domain authority site would benefit most. Don't confuse technicalities with absolutes.  Many of those who have are now battling the Penguin.