I still disagree with the premise that link to other sites via exchange is wrong. I do not define linking to affiliates or business that I want to support link farming.
Personally I don`t think is wrong to advertise your business on other non-related sites. How many of your competitors are going to add a link to you? As long as you stay clear of "bad neighborhoods" (which is perhaps what you are referring to as link farms), porn, and gambling sites I think it is valid.
Unless you feel like supporting Google by paying 10-20$ per click for many top key words only to find yourself a victim of fraud....... Reality.
Deet Da Deee...... Listen don`t just hear. Link farms are link farms. Even DMOZ is irrelevant these days. The latest information directly from Google is not to link farm generally speaking.
Even a two-way reciprocal link with another partner, as most think is beneficial, is no longer advisable. This links negatively now.
In other words, I am in IT as a business, to link to another IT company as mine is a mistake as the average surfer is thinking "so what." Besides, why would I link to a direct competitor or a similar business in another city. Like my customer is going to drive to Houston for computer service even though my business is located in St Louis.
The way to link is indirectly with a similar like sector. In other words, only link in vertical markets. My company is IT service so creating an incoming link with say a distributer of computer related goods is ideal.