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I'm not sure I've understand what you mean by this - "changed his anchor text recip page after every trade" - could you explain this a bit more.
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Bill, I think you answered your own question with your next paragraph. Change the links that trade partners use when doing cat trades, or better yet just let them supply their own anchor text (assuming they'd use something relevant).
I also agree with your next post about the links at the bottom of pages. I'm sure they can detect this. Whether or not they will "penalize" for it is unknown, but it can't hurt to assume they do.
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It needs to be tested. Some folks should file reinclusions and see what happens. Some folks should make changes without reinclusions and see what happens.
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I'm pretty sure someone is doing this.
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At the same time, reciprocal linking between similar sites is still a good idea, I think.
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I think Google has pretty much said that they don't care for reciprocal linking for the purpose of manipulating PR. But in a "natural" linking scenario among relevant sites within an industry where no one is doing any link exchanges, there is going to be
some reciprocal linking. Maybe the algo looks are the percentage of recip linking on your site compared to the percentage of recip linking on other sites across your sector of the internet. Just a thought.