I'd say search engines want our sites to be full of good and unique content. They tell this by the number of good quality on topic links
So now when we figured(ish) what SEs like, its time for problem solving. I have a little idea. Site 1: "free web buttons" at www freewebbuttons com wants to exchange links with Site 2: "cool computer games" at www coolcomputergames com Instead of just swapping links why cant these sites swap pages? eg site 1 makes a new page and calls it www freewebbuttons com/cool_computer_games.html. Site 2 can then provide some keyword optimised content for that page, anchor and url/s..... And vise versa So the end product is a link or a number of links from a related page, with related/quality content and even related keywords in url. As far as the SEs will be concerned these would look like natural/quality backlinks. I guess if you do it 3 way SEs wont even see this as a link exchange. Oh and you can whack a bit of adsense on that page as well... The great thing is that the participating websites dont really have to be related. What you recon guys? PS: I bet someone will go... "But then you will have to wait untill the PR update because these new pages wont have any PR and stuff..."