I have critiqued pre-publication drafts for a few people. Mostly it's been fine. But two were truly horrible. The first time I wrote a good review because I'm a nice person and didn't want to hurt her feelings. It was a tedious memoir and she was so encouraged she wrote volume 2! The other time, the writer was quite good, but the subject matter was one about which I would never, ever voluntarily read a book. It was a boring book, filled with well crafted sentences. I told the truth, but didn't review the book. I also lost a friend.
I learned not to promise anything until I read the book. I never promise to an exchanges of I'll review your book if you review mine, although I review books by authors who reviewed my book if I like their book. So far no one has pressed me or complained when I don't review, but it's awkward. If I don't resonate with a book, I usually don't read all of it and don't have much to say. I don't want to trash anyone's creative work. From my perspective, it's better to say nothing.
I respect your policy, Barb. I feel there is a conflict of interest in a writer negatively reviewing another writer's work, especially if they are writing in the same genre. The place for that is a critique circle. And anyone who has been in a critique circle knows how subjective a review can be. It seems writer-reviewers should alwyas give the benefit of the doubt to a writer whose work they dislike, and simply refrain from reviewing It.