Is reciprocal linking dead? Of course not. What should be history, is the practice of requesting reciprocal links for the purposes of improving search engine rankings (if you are still sending out those link swap request emails, please stop, you are wasting your own time and effort). However, reciprocal linking should still be a part of your web marketing strategy.
As you build your web site you should be looking at building lots of relationships with other site owners, related magazine editors, and other people of interest to your business. Linking out to relevant quality content on other people's sites needs to be part of the mix. It's a tool that can be a part of building a relationship. Done correctly, it can also make your site a better experience for the visitors it receives.
With regard to reciprocal linking, don't ever trade a link with a site that you would not simply link to on it's own, even if they didn't link back to you. If it's good enough for you to link to, then there is no reason why you shouldn't try to get a link back from them. You just need to view the process as part of a larger relationship.
And that's the key. Linking between partners is a common practice. Or, if you link to someone, feel free to let them know that you did. I usually do this without asking anything in return, because we do view it as building a relationship. People often respond when you do this, and when they do, you can get a chance to tell more of your story.
Personally, I believe that this type of cross linking may well help your search rankings (because of the high relevance of the links), but more importantly, it exposes you to the audience of the other site. Some of the other site's visitors may not see what they want there, and come over to your site. And who knows? If they like what they see, they may link to you.
Introducing SES Online
Want to view one of the sessions you missed or listen to an especially informative presenter a second time? SES New York sessions are available for purchase on ClickZ Academy's new e-Learning site. SES is now Online!