Free or Nofollow
Looks like Google is squashing all directory owners dream. Matt Cutts, who is the head of Google's webspan team put out a blog post about how Google will be going after people who has paid links on their sites or is it that they are going after people who are buying paid links...

.edu and .gov helps PR
Sure a link from .edu and .gov will help PR, but it's no different than having a link from other sites that carries the same PR as those .edu and .gov sites...

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