Hi Claire,
So, in essence - i don't think this is a great idea, primarily because i think it carries enormous risks that will be difficult to manage if you take this approach at scale.
Firstly, what happens if your free clients don't rank following the on-page work and linkbuilding you do?
Assumedly, as they're a free client, there is no contract involved here - so if the work you do doesn't help, then they will likely refuse you access to their site to build links out on while presenting you with a large reputation risk if they decide to negatively "out" your practice. Moreover, the lack of contract again means that you will have no legitimate complaint if they decide, a few months after your work with them, that they want to remove the links and articles you have placed on their site.
Are you being upfront with the free clients about the sites you will link out to on their site? If it's not in their niche, or worse something highly spammy - i can imagine a lot of them getting upset about you using their site to advertise on.
Additionally, this seems like a very expensive and time consuming way to build links for your existing paying clients. if you have to do more SEO and linkbuilding work every time you need to get a new link from a site - you'll be putting in dozens of man hours for only a handful of links on PR2 blogs that you are at risk of losing at the whim of an unhappy webmaster. If however, the plan is to have basically free access to a site after you've done a little bit of SEO work - then you're basically just taking advantage of the free sites that sign up and again risk losing it all if a few of them become unhappy.
It seems to me that a better way to approach the concept would be to find these decent blogs/sites and then build a strong guest posting relationship with them, offering them quality content in exchange for links. This way, the content containing the links becomes the value you are exchanging, rather than the somewhat intangible SEO work and it's clear what both sides are getting out of the deal on an ongoing basis.
Alternatively, there's nothing wrong with brokering relationships between sites that you work with, allowing them to guest post for each other and strike up an ongoing relationship; I would just be wary of leaving yourself as the middleman, unprotected by any contract or basic trade agreement.
Hope that's helpful,
Phil