Strictly speaking the answer is yes, but if you want to put it on the black - white gradient it would be very light gray. You are creating artificial links internally, but if you own a network of sites it's a reasonable expectation that you'd cross-promote them. If you're a small guy with lots of blogs it's more likely to come across a little sketchy, but nobody thinks it's sketchy when Gawker interlinks with all the sites in their network.
The important thing is it's not dangerous. You won't get any sort of penalty, but as you probably know you're going to get diminishing returns for every link you use. You're not actually creating juice, you're just distributing what you have evenly to prop up your other stuff. In the end you still need good inbound links from some external source. As far as Google is concerned, that aspect of the algorithm does enough to keep their results good.
Now as far as the diminishing link quality, you can minimize that by using different IPs, but even that will only let you make real juice go farther, not create it out of thin air. Besides that, it would really be a stretch for Google to penalize you just for hosting your sites on different servers. Even if they don't like it they're in no position to judge you.
The only real hypothetical danger would be if you did some BH link building to any of your sites. With all that interlinking, a penalty on one could cause a domino effect where your network is identified as a "bad neighborhood". This is really why the real blackhat link builders bother with different tiers of links and whatnot.