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In my experience, the link structure of a lot of blogs (specifically, a jillion sidebar links replicated on every page of the site) started meeting with serious Google disapproval one or two years ago. I lost some serious traffic when it happened.
The fix, which many SEO/bloogers were already doing and so they never saw the problem, is to control total outbound links and especially avoid replicating the link-heavy sidebar on interior pages. Even then, it takes months and months (six months to a year) for Google to stop crapping down your chimney once you've felt the need to make that sort of changes.
Just my two cents, you'll get many differing opinions because everybody's experience is a little different.
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