yeah I think that free hosting and blogs is going to be the way to go on this, because google is now looking at your backlink in many ways other than just the fact that it is a link in determining the quality of your site. Latent symantic indexing is just one example of backlink interpretation.
This means that if you have a lot of suspicious feeder sites that get banned your white hat "money site" is going to probably eventually get banned or at least receive a penalty.
i think that the advantage of using free sites and blogs is that it "looks" more innocent, as anyone could be linking to your site from a free site, and if it is a big site that has other users with legit content, I would guess that google is less likely to penalize your main money white hat site for having blackhat feeder techniques, as there is lots of legit content on the domain as well, of course that part is just a guess.
