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1. Link wheel is a circular chain of related, unique content which constitutes a good strategy while link farm is a form of spamming the index of a search engine. Since link farming is done with the sole intention of manipulation, it comes under black hat. And for that matter, when you are doing link wheeling only for the sake of crazy linking, it ceases to be effective.
2. I think I have answered that above.
3. Link wheel...provided you are linking quality content and adding value
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