I have noticed that quite a lot of websites have set up directories in the link sections of their sites. Does reciprocal linking on this scale work? With things like <name of product removed>, I get a lot of link offers from irrelevant sites - I was under the illusion that for SEO purposes it's best to keep reciprocal linking to sites in keeping with your own? Or is it worth my setting up a mini-directory within my site? Would really appreciate if anyone can shed any light on this as I hear a lot of conflicting opinions. Thanks!
In theory, it could be beneficial. But the reality is most websites who will want to do a reciprocal link with you are sites that are ranked low themselves. So their links won't help you much.
Don't do it. reciprocal links are too easy to track and Google frowns upon them. If you are using a script, then it's very easy to detect. Back in the day when linkfarmns sprang up it killed reciprocal links. They are still valid links providing they are "natural" - that means manually adding them and manually exchanging with webiste, which is too slow and probably not worth it.
This worked GREAT 2-3 years ago. But nowadays maintaining the directory is not easy and most people will give you reciprocal links from pages with 1000 other directories.