You are absolutely right mpls-web-design, IMO also reciprocal linking is bad, since no SE likes it. But I have also seen that for link exchanged between related websites are getting more value.
So if you want to start the link referral program, then at first you will have to fix the type of web sites with whom you are interested for it. It will succeed, since I know many people are there who want to get links. Just you will have to promote your program in a right direction.
Cheers