My experience is that google frowns upon link exchanges, as they are a form of link scheme; google is crystal clear about this in their official policies on link schemes; quote: However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites. This is in violation of Google's Webmaster Guidelines and can negatively impact your site's ranking in search results. I run a tea website and I know the niche well. Most sites that engage in link exchanges are obvious: they collect the links on a single page, and they often do not link to the best sites, because their own site is mediocre, and the best sites would not link to their site, and because they only link to sites that link to them, they don't link to the most useful sites on their topic. Because of this I've decided to never engage in any link exchanges. If a webmaster emails me and tells me to check out their website, I'll gladly check it out, and if it's useful and high-quality, I'll add it to the relevant section of my site, regardless of whether or not they link to my site. While I do have a "resources" page, most sites I link to more naturally, either citing them as a source when relevant, or linking to them from within the text of various pages. And in the cases of blogs, I generally link only to blogs I subscribe to, and again, I do so regardless of whether or not they comment, subscribe, or link to me. I'm interested in learning how many webmasters take this approach, and I'd also like to encourage others to adopt this approach. My experience has been that it helps you to break into a new realm of quality.
Offering quality content, including links to other relevant pages, is the best thing in the long run. Targeted visitors will come back to your site, which has a much better value for you than any nonsense link exchanges.
Google's focus on links for ranking purposes has pretty much killed the natural linking. People used to link to pages just because there was something to reference there, and now they have to think about their search rankings being influenced. And the nofollow attribute is threatening the PageRank algorithm itself, because of how heavily people use it for all external links. Also, link exchange was there before Google, and now people are afraid to do it because of Google's policies. That's just sad. To answer your question, I don't think it's worth dropping link exchange idea entirely. As long as your resource page is relevant to your site and provides some value to the visitor, you're clearly in the white hat area. It's when you start linking automatically to thousands of unrelated sites, then Google has all the grounds to ban you from their index. As for the general external linking policy, I often have reservations about distracting my visitor from the most wanted response I want on a given page.
Totally agree... don't discard link exchange completely... I think even google say it's fine to do link exchange with quality sites in the same niches as it might help the visitors.
@cazort: I will give you a link if you send me over some good green tea. Just kidding. =) But green tea is IT!
Possibly because I have a master's in statistics (but I think I thought like this before I got that degree), I insist on testing something before I accept it as fact, unless I have strong reason to trust that someone else has tested it (as in, they post/explain how they tested it, like a scientist would). People often speculate about cause and effect and about how the PageRank algorithm works, but don't back their comments up with evidence. Based on thoroughly examining my own site as well as others in my niche, I am solidly convinced that Google rewards natural linking. Some evidence I've seen for this has been: (1) quality of outgoing links being just as important as inbound links, if not more so for young sites. I've seen discussion of this on other people's blogs, and I've also tested it on my own sites. (2) at least in my niche, tea, many of the highest-ranking sites, including newer sites, have no links page and do not engage in link exchanges. Those that do, such as English Tea Store's Tea Sites Page, very notably link to some sites that do not link back to them, and that are instead selected based on quality. Also, English Tea Store links to sites in other places on their site--for example they linked to my site from a post in their blog. If you want to network with other webmasters to "exchange" links, the best way to do it is to figure out where their sites would be most relevant on yours. Then, add them to pages throughout the site. This will make your site more useful to users anyway. Links pages are only useful if they're a collection of specific resources. For example "Tea Websites" is too general, but it's useful when someone publishes a list of tea-related forums, or a list of tea companies. Possibly more importantly than overall rankings in search results, I've found that if you're doing anything other than purely natural linking, your search results will be very unstable. Sometimes you can "game" the system but it will play out in unpredictable ways, as google is constantly updating and changing their algorithm to catch people who do these things.