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If I would be in Steve's place, I would consult a SEO specialist in order to know what the effect of thousands of outbound links is on my sites PR (Google Page Rank).
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It's not a problem. However, sig. links these days are generally given little-to-no weight by the search engines either.
What we do on my forum is allow only registered members to see sigs. so the search engines don't even see them this way. Many forums also put on the nofollow attribute for all sig. links if they are viewed by search engines.
We also limit the sigs. to 2 lines and 2 links and they are a smaller font size than the posts. This way they are not quite as distracting to people as sigs in other forums. But it takes a lot of time to enforce the rules and you have to be diligent about it.