if you use a custom module for the 'Related Products' and create a one-to-many, from Product Catalogue to Related Products, and also one-to-many from Related Products to Product Catalogue, it seems to work fine, or have I missed something?
However you are introducing a new module called "Related Products" that comes with extra effort of maintaining a new module.
What I am recommending is to create "many to many" relationship between "Product Catalog" to "Product Catalog". And creating "many to many" relationship between product catalog to product catalog is not that easy so I have forwarded the blog for doing that.
