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I am in the sign/banner business, for years I have had a flash based web application that I developed which allows customers to design their own signs/banners online.  With the demise of flash i am prompted to begin developing an HTML5 based application to take it's place.  Developing this software is a rather expensive endeavor so many local sign shops, which don't sell on the web, don't bother to develop such an application, but what if i gave it to them?  I assume a fair amount would find great value in such an application thereby allowing their clients to communicate a design idea without having to drive to the store front.  The application would actually run embedded on my site thus earning me a link back to my site.

Question is this: Is this a bad idea.  If dozens of sign shops are running my application embedded on their sites will the help or hurt me?

Thanks.

This begs the question, should i report my competitor who has achieved terrific results with this method?

I have been looking at my competitors links and I have discovered that a competitor with top positions in the SERPs has been gaining links by offering free product samples to bloggers in exchange for links within the review back to their site.

My question is, does Google frown on this?  Can it invoke a penalty?  To me it seems tantamount to buying links, but yet his results speak for themselves.  It is something I intend to start doing myself if I am sure it won't result in a penalty.

Thanks.