Weird Backlink Strategy?

One of the members of my site has been generating upwards of 200-500 pageviews a day, all from Google, across several of his pages on my site. The thing that is weird is that my site is a BOOKMARKING site, which aren't really famous for being the first page result in a Google search. The other weird thing is that sometimes he will rank 1st page in Google a couple of hours after he submits a bookmark (with nearly 8 million results for the phrase).

I have tried to contact him to see if he'd shed some info in return for a few site perks. When that failed, I tried to find his linking strategy myself, and it almost looks like an unsophisticated link wheel.

Here's what it looks like:
He creates a bookmark to his own site on my site. Then he bookmarks his submission from my site on (for instance) 10 other sites. Then he bookmarks one of those bookmarks on the other 9 sites. I assume he would continue the cycle somewhat, but I stopped checking to see if he continues to "bookmark his bookmarks" all the way down the chain.

I can't find any other tactic he is using. I want to make sure he's not going to get my site penalized or using any illicit strategies, but at the same time it's nice to outrank HubPages, bigger bookmarking sites, etc., for the same keywords and key phrases.

Is this strategy viable, or am I missing some information here? Google webmaster tools isn't a big help, neither is site explorer or other "backlink checker" websites. If he can do this for his own content in a few hours, and I can figure out the formula, we will all be rich in a couple of days (sarcasm, of course).