This is a great discussion - glad I saw it - just read back the past few days. Sounds like we have to decide for ourselves what is ethical and what is not - the internet is still an "unsettled territory"... how on earth would anybody police it all?
It is probably a good idea for those of us who don't really know - just to ask on the forum -- does this sound ethical to you? Maybe that would help us make decisions when we are in doubt.

Link cloaking actually is used to keep Dishonest people from bypassing your link. Its a shame that we have to do link cloaking. Its no different than using virus software to keep viruses out of your computer.
Grey and Black hat SEO. 1 example. Google uses popularity for ranking your website. The position of your website in Search Engine Results (SERPS). They feel that if you have a site lots of people go to for certain keywords and they bookmark it in Digg and others, then you MUST have a relevant site. So there are lots of people who think its alright to use a program to SPAM social bookmarking sites to increase the link popularity of their sites. These programs can literally give you thousands of backlinks. These programs will even make it a point that they will do this in DRIPS so that it won't raise any red flags. That statement right there should tell you it is a dubious practice.

Is link cloaking considered black hat or gray? Or not? JW. I think some do consider it bad.

BTW, What exactly is Gray Hat SEO methods. Can you give examples?

Wow aRBie. Respect to you. Integrity or lack of it affects all of us. When I tell people what I have been doing online, it's amazing how many think that I'm going to be professionally damaged by a sleezy industry, hurting myself, wasting my time. I'm the same high integrity person I've always been. My inbox is full of black hat techniques being promoted as if it's a reasonable part of the biz.