Paid Posts & Paid Reviews CAN Hurt Your Rankings - Official

I'm just skim reading this brilliant interview (thanks Sri) with one of those in Google's Search Quality Team that looks out for dodgy methods or attempts to game the system by SEO professionals and noobie's out there. One thing that's jumped out at me is this question and answer:

What is Google’s policy about Pay Per Posts? Shall for example Polish services like krytycy.pl put into their guidelines the mandatory use of the nofollow attribbute on links in sponsored articles?

To quote Matt: “Paid links that affect search engines, whether paid text links or a paid review, can cause a site to lose trust in Google.” Not referring to any service in particular, if a webmaster wants to build up reputation and trust with Google, he or she should make sure linking on the website would not be perceived as deceptive. Let me add that the Search Quality team has made a substantial effort in paid linking detection over the last years and we keep on working on it.

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Is reciprocal linking e.g. A<->B, B<->A a violation of Google Webmaster Guidelines?

If linking is natural, based on relevancy of content sites I don’t see a violation of any Google Webmaster Guidelines. I remember the case of a small vet site and a pet food wholesaler located close by, linking to each other. That seems pretty reasonable, since visitors from the one site could be interested in the content/offer of the other, right? On the other hand, if you think of a games community forum cross linking with a bride shop in Warsaw and an all inclusive hotel chain in South Asia, the chances are low that the links have been set for users. Obviously, the second example would be a violation of our Webmaster Guidelines. Let me add that the algorithms we have been working on are fairly precise in determining the relevancy of links.

You've gotta earn your stripes, not pay for them.