As the OP, I am closing out this old thread with the summary of the house trade. The trade when very well! It was really fairly simple once we were able to get all of our heads round the idea that it was just two, separate house sales. We mainly focused on the difference in the prices, since the buyers of our house wanted enough cash out of their house to be mortgage free. It helped that I created a small spreadsheet, and we did all of the negotiating face-to-face.
It also helped that we were good friends before, and that we remained good friends throughout the sale and after the sale. However, I think we were very lucky in this regard, because someone you perceive as a friend, could turn quickly in a business situation.
The biggest challenge was the logistics of the move. Again, easy since we were friends, but nonetheless, it was a continual challenge. Most of the time in a sale, someone moves out of their house first, so you move into an empty house essentially. In the trade case, we were both wanting each other's space. So we stored much of our items in the moving truck over the weekend, while they moved out. We also shared half of each other's garage for a while.
All in all, it went great, and it provides great stories for moving forward. Especially since we moved back to our old neighborhood, so the neighbors know both families.