I'm involved in the development of this script. I'd be curious to know what some SEO literate people think about it.

There are likely hundreds of sites running some prior version of it, since its based on PHPLinks but we have added some features like...
session ID supression on detected search engine spiders.
optional featured sites function w/ site thunbnails.
site reviews.

I can attest that the session ID supression works, since google completly spidered the working demo at
http://www.dew-code.com/links/

The primary function of a directory/link exchange package like this is to increase backlinks to the sites running it, but I'm curious, what other SEO methods might we be able squeeze in there? Latest version, currently 2.0.1.0B, is here
http://www.dew-code.com/modules/mydownloads/

What do you think? Is this worth continuing development on. or is there already something better out there w/ GPL liscensing?

I don't like your session ID suppression thing because there is nothing that google hates more than when they don't see what everyone else sees - i.e. you could get banned from google if google sees that a googlebot gets different URLs, text, etc. than a normal site visitor.

Also, I would just see if you could figure out a way to integrate mod_rewrite into your script to eliminate query strings? in URLs.

wow.. I had really hoped for more feed back by now..

Um, perhaps you are unaware, but not printing session IDs for bots is a totally rational thing to do, Google knows this. What you are reffering to is called cloaking, where bot detection triggers altered content. I assure you, not printing a session ID in an href is not penalized as intentionally cloaked sites are.

Also, a month or two after your response, Dew-NewPHPLinks SEF was released. Somewhat inspired by your response and the search engine friendly url feature from OSCommerce.

With thr SEF version, urls end with "directory/Cool.html" for the "Whats Cool" page and
"directory/7.html" for a sub/category page

I would rather have names than numbers, hopefully next release.

No one else has tried this script? I am saddened :( Well if you don't have the latest version bundled in your nearby Fantastico c-panel widget, drop on by dew-code.com