Paid link violates Google's quality guidelines?

In the google webmaster tool -> Dashboard, there is a link of Report paid links and it tells us "Some site owners attempt to "buy PageRankâ„¢" in the form of paid links to their sites. Buying links to improve PageRank violates our quality guidelines."

Questions:
1) Should I link to either Paid Link or Non-Paid Link (Directory)?

2) Is it violates the Quality Guidelines, if linked to Non-Paid Link Directory which included paid link services?

 

Basically it comes down to people reporting paid links. If you are reported for buying and they can show that you bought links they could devalue your links. If you are buying to get traffic, I say buy , if you are buying just for the PR, I say be careful because if the site you buy from or you are reported and Google decides that you purchased links, you could be penalized both in PR and Serp.

 

Google will examine carefully something like 30 billion sites (as of February 2007) out there and then will take action against the cheaters.
So lets say you buy a link today, in year 2057 that same link could be devalued

 

I am not really sure how this could work. But by encouraging people to report paid links, google is keeping everyone up on their toes

 

if your aim is getting links for hits, it will not be a problem but if you are getting links for increasing page rank, you may get so many problem. what is your aim while you are getting links?

 

I would not hesitate to buy and trade links to get traffic to my sites. Buying and selling links is a perfectly legitimate form of advertising that predates Google.