If you're interested in how Google treats site-wide backlinks, you'll be interested in a new Webmaster Help video Google posted today. Matt Cutts takes on the following question:
Are site-wide backlinks considered good or bad by Google? Or do they just count as 1 link from the whole domain?
"On the algorithmic standpoint, typically I've said before, if we have like keywords - the first keyword counts some, the next keyword counts a little bit, but not as much, the third keyword not as much...so even if you do keyword stuffing - even if you throw a ton of keywords - at some point, it becomes asymptotically diminishing returns, and it doesn't really help you anymore," says Cutts. "You can imagine the same sort of thing, you know, if we see a link from a domain, we might count it once, but if we see 50 links from a domain, we still might choose to only count it once. So on an algorithmic side, we do a pretty good job of compressing those links together."
"But then there's also on the manual side," he continues. "So, imagine that you have a Polish website, and then you see a site-wide link in English talking about, 'Rent cheap apartments,' you know. To a regular person, that looks pretty bad. So, certainly it does happen that you have site-wide links - maybe you have a blogroll or something like that, but if I were a manual webspam analyst, sort of doing an investigation, and we got a spam report, you're an English site, and you've got a site-wide Polish link or something like that or vice versa, it looks commercial or it looks off-topic, low-quality or spammy, then that can affect the assessment on whether you want to trust the out-going links from that site."
See more recent videos from Cutts here.