I think there are three conditions for a "perfect" 50/50 language exchange:

1) meet face to face

2) both have a defined goal, like "preparation for language test XY, level z until October 1st."

3) observe a defined time for work on one language, then on the other language

I had this situation once and it worked great.

All other solutions have some reduction on the efficacy of one or the other side.

My experience with language exchanges has been fairly good, but I haven't had one in a long time. The trick is finding someone you "click" with, which is easier said than done. For a while during the World Cup I was having regular language exchanges with a guy from Valencia, it started off slow and awkward, but after the 4th or 5th exchange we started to gel and find common ground. During our last handful of exchanges it felt more like I was chatting to "one of the lads", than a complete stranger over 1000 miles away. Time-zone differences weren't an issue because Spain is only 1 hour ahead of my local time, and we always had plenty to talk about thanks to the World Cup.

The biggest obstacle I encountered in having a "perfect language exchange" was trying to maintain a 50/50 split between languages. This difficulty arose because my language partner at the time had a much higher level in English than I had in Spanish, so naturally the conversation we had in Spanish was fairly bland in comparison, and punctuated with awkward silences. Since I wasn't able to express myself well enough in Spanish I tended to seek comfort by switching back to English. All in all I think he probably could have made a little more of an effort to keep the conversation flowing when we were speaking Spanish, but apart from that I have no complaints whatsoever. I'd say we ended up speaking English around 65-70% of the time, but I didn't care at the time, and I don't care now. 

At the end of the day, you have to use your target language in order to gain fluency, so language exchanges are a must if you don't have anybody to practice with in real life. Once you get past the initial stages it can actually be quite enjoyable, but again, it's easier said than done.

I think it works. As Spangola said, it is easier to talk with the language the more advanced learner is studying, so I think it is a good thing to talk to several partners with different levels, or to arrange when to start and finish using one language, for example, to talk with your language for 30 minutes, and then with your partner's language for another 30 minutes.

"I had to abandon all hope for a 50/50 language exchange, after I realized that I could benefit so many more people if I gave up my study time in a foreign language." - Bruce

  I had to abandon  all hope for a  50/50 language exchange,  after I realized  that I could  benefit so many more people if I gave up my study time in a foreign language. 

  There are so many students  who want practice in English, that I offer this  as a full time activity.

  A  1 hour lesson per week,  conducted for  about 2  months,  does  result in noticable improvement.

Beyond that,  students rapidly improve.   Were I exchanging  a language,  my students would improve far more slowly, and I also would improve slowly.

  The end result is that I am happier   working in a way  that is most effective for others.

I practice a full hour of English with students.