SEO'ing Directories

Does anybody have any insight on SEO'ing directories?

Are there any good plug-ins? Would I be penalized for having a lot of outbound links?

Any tips from anyone who runs a successful directory would be helpful.

Thanks in advance.

Just put a rel="nofolow" on all external links - you will be just fine.
If you want to do internal SEO - split it into sections (every cat in each section) to spread the juice. Friendly urls, good headers and get a ton backlinks

a directory will all nofollow links wont work very well, at least you wont have many submissions

do a paid directory, no paid has no follow, paid has followed and perhaps a more detailed listing

look at joomla - it has a number of directory plugins you can install as well as components to search engine optimize them too

a relatively straight forward combination would be joomla/mosets tree/aec however i dont personally like mosets tree since it costs $200 and i also think its encrypted

but if you gonna make uber amounts of $$$ from your directory then $200 shouldnt be an issue

hth