We don't encourage or allow biting as part of the play-fight, but we do play-fight with both our dogs. Sometimes we'll chase them around the house or play hide-and-seek. Sometimes we roll them onto their backs and rub their bellies really erratically to get them going, then throw a ball or toy. We have Golden's though, and they already "mouth" people enough instictively, so that's why I don't condone allowing any sort of biting. I'm trying to break their habit.
However, the cat is a totally different story. Sometimes, he just gets in the mood to fight. It's funny- you can be petting him and he's purring, then the next second he's decided he wants to play and is trying to bat your hand into his mouth. We play-fight like crazy with him- roll him around, grab his paws, rub his belly erratically- anything to rile him up. Usually about 3 minutes later, he's had his fix and he goes back to being a lazy sweetheart. I guess that's not very consistant to fight hard with the cat and scold the dogs when they bite during play-fights... but Jinx doesn't have a mouthing problem either, and his mouth is a *whole* lot smaller and less powerful than the big dogs' mouths!