Reciprocal Links: Always Bad ? Always Useless?

In checking my competitor's backlinks, I find they have a good link from a site that allows "just anyone" to submit a backlink, but they want you to paste a reciprocal link in exchange.

Everything I have read up to this point says that Google looks for this and invalidates both links when it finds it. So this opens-up a long list of questions.

First, if what I've read from so many sources is correct, then why is the "reciprocal link place" giving a good backlink to my competitor (according to SEO Spyglass)?

What if the other site's reciporcal link is on a secondary page on the same domain as the backlink?

I'm pretty sure none of this is usefull, but then I want to know why the competitor still gets juice, when the "reciprocal link site" is still making the offer, etc...

Could this be some kind of trap, where the competitor get's juice, but everyone else loses if they submit here?

I would not say that reciprocal links are worthless in general. I just wouldn't do a link exchange with a site that's actually more like a link farm or something... there are a lot of decent small and big sites that offer reciprocal links.

I have a few sites with mostly incoming reciprocal links (PR3+) and it is working well. Even got a PR5 link from a site with a lot of authority in my niche. But I think, an important point might be that the content of those sites is very closely related to the content of my sites, same niche. So the links are not "trash", they're placed in the right context... and the owners of the other sites make sure that they don't put just any spammy link on their site.

Reciprocral linking between related sites can be powerful, but linking reciprocally with link farms and link pages, toplists and so on is useless since 2003.

YEs infoasian is right you have to check first then apply for link exchange