This summer we went to a 5-yo birthday party. In lieu of gifts, everyone brought a wrapped book and they did a book swap. Sat in a circle, played music, passed the books around, and when the music stopped, everyone got to unwrap and keep the book that they held. It worked great! The mom said that they went to a party like that, and her son decided he wanted to do it too. Didn't care about not having his own gifts to open. And, his mom didn't put together party favor bags filled of items made in China -- instead, everyone left with a nice new book. The mom had some extra wrapped books there, so that, for example, my young daughter participated too (since I had only brought one book).
A few weeks later, my son had his 4-yo birthday party. Gift time was a nightmare. All the kids wanted him to open their present first, my son got overwhelmed, and at the end of the party we had a bunch of crappy plastic toys that he played with for a few minutes. Next year, we'll do the book swap!
UNLESS my child specifically came to me and "chose" to do a party like the book swap mentioned above, I wouldn't push it. I'm thinking that particular mom pushed that idea to make herself look good in front of the other moms (don't we all try to do that ) and to try and control her child's day. I bet it took weeks or atleast days of coercing for that mom to convince her child he/she didn't need real gifts and needed to give to the guests instead of receiving for himself. You didn't see that part, you just saw the end result. I just couldn't do that to my child on their special day. I would rather have NO party than a group party where all the kids get the same exact gift. It seems odd to me, almost silly. Sure it could be PART of the whole party (the book swap) but not the total idea behind it all.
I'm old fashioned and think the birthday child is special and needs to enjoy that day as their special day. I think the book swap idea would be good maybe for older children or for a party held in a classroom at their school. JMHO