Re: Would this work and is it allowed?
There are perfectly legitimate reasons for linking between sites, even if they are all on the same server. For example, many large businesses have a main website, and then a number of micro sites for promotional campaigns etc.
As long as you create a decent site, with decent content, you should be ok and not incur a penalty. You need to look at each site as a single unit, and act as if that site was the only one you were creating and optimizing accordingly. You can then link them together after.
Theres a big difference between a number of decent websites, all in the same area, but each one dedicated to a subject, and a load of spammy sites trying to game google. Again, optimise your sites, but create them for your users rather than for the search engines and you should be fine.
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