I guess the word penalize is were most people get lost and head for the hills. So if I go from page 100 to page 1 with reciprical link building and then get shoot to page 300 was I penelized or tested? in my experiance I was tested because if I just keep going I will end up back on page 1 and normally I will stick there.

The big G rule on this is as clear as mud to me because and as said above this has been a topic of disscusion for as long as we have been online.

I agree with what Doug is saying about the Gurus they love to scare and overwhelm us so we don't think we can rank our sites without them or their new shinny product.

How do you know if you site is being "blacklisted" by google?

Google has a few different penalties. Most penalties result in your site dropping in rank but they still remain in the index. The ultimate penalty is when your site is dropped from the index and that can be permanent or at least last for years (speaking from personal experience). If you go to Google.com a few weeks in a row and search using your site's url and it doesn't show up in the first page of search results (and it used to) there is a good chance you have achieved the ultimate penalty.

*Note: Be careful if you are searching from a toolbar instead of directly from Google.com as you may be taken directly to your website and you may think that means you are listed in Google - it doesn't.

It is true that Google relevancy improved over the years, but still You can get punished for progressing in search results to fast. I doubt anyone can tell You what exact rate of progress would get You to the first page and to stay there from the first attempt.

It is strange reading this thread four years after it was started, with recent announcements by Google that it intends to target sites which over-optimize, and mentioning those with link exchanges in particular. It seems nothing has really changed on that score ....

If you put your link on your same niche suppose your website is on Real Estate and you are placing links on same site it will be much better for you and other question was about link Exchange listen if you are exchanging with same niche it it is also much better but links I prefer to exchange quality links.
Thanks hope your got my point.

Just remember though, that a link from a PR 3 site is worth about 250 links from a PR 0. A PR 4 is worth about 1000 links from a PR 0. These are not at all exact numbers but they are relative to show the exponential power of a high PR link. And remember too, that it is not at all natural to have links form high PR sites and not more from a PR of lesser value. In other words, make sure that your linking looks something like this:
PR 0: 1000 links
PR 1: 500 links
PR 2: 35 links
PR 3: 15 links
PR 4: 8 links
PR 5: 2 links
PR 6: 1 links

You get the idea. This is 1000X more natural than this:

PR 0: 10 links
PR 1: 15 links
PR 2: 345 links
PR 3: 50 links