I've heard that often in 'blind' peer reviews, the feedback will often be : "Paper would be improved by including reference to the work of XYZ" - essentially creating additional citations for author XYZ (who may, coincidentally, be the reviewing peer, and may feel that getting additional citations for their own work is the payment they require for doing the review work).

This definitely happens, but often you're asked to review a paper _because_ of your experience or publication record in that area. If someone neglects to cite your related work, should you just let that slide?