Why Off Topic Link Exchanges Suck

So I recently got this email:

Dear Webmaster,

As you are probably aware, Google has changed its algorythm and now removes sites from its search results when they have exchanged links with sites that are not in EXACTLY the same category.

To prevent being from blacklisted in Google, it is imperative that we remove our link to you and that your remove your link to us!

Our url is www.SITE.com.

We are removing our link to you now. PLEASE return the courtesy and remove your link to us!

Note that Google is updating its results this week and failure to remove these links immediately will likely mean not showing up in Google for AT LEAST the next 4 months!

Thank you for understanding,
Site.com Partners

The email is bogusly incorrect, and I don't think I traded links with the site mentioned, but that is the exact reason why this email is extra crappy.

If you trade links highly off topic you increase your risk profile, and if it helps you rank:

• Whenever there is an update your competitors can send these remove my link reminders out for you.

• There are only a limited number of relationships you can have. If you link out to a million sites your links out to junky sites will be a higher percentage than most sites, you will have more dead links than most quality sites, and many of those people will remove their links to you.
• Your competitors could pay people from Jakarta $3 a day to go through your link trades and trade the same links.
• Quality on topic sites may be less likely to link to you if your site frequently links off to low quality resources.

I think most sites which recently went south in Google probably lacked quality linkage data, not because they had too many links.