Re: recips still out there
Because natural link reciprocation is completely acceptable - thus it is very challenging if not impossible to "penalize" in an automated manner - thus these kinds of situations are almost (that I have seen) universally handled upon manual review.
The best thing you can do (if it's a competitor and you want them to be forced to play fair) is document in clear detail their activities and file a robust report to Google.
http://www.google.com/contact/spamreport.html
Starting LEC 7 soon but it won't be called LEC 7 - LEC 2012 coming soon!