How about subcontracting for an existing agency? You could do development work for a design shop, or overflow work for a development shop. Once you convince them, they'll be the ones finding clients. On the flip side, you'll just be a cog in the machine -- just coding to spec, rather than participating in and contributing to the client's success, which seems to be the agreed-upon recipe for freelance success around here.
The one thing I'm sure of: don't work for free or rock-bottom rates. If you're trying to pad out your portfolio with the goal of attracting future clients, you might as well just make a project for yourself. I made a couple sites for free for people who had hobbies, as opposed to businesses. They never got around to filling in the site content, so they didn't make for very compelling marketing. Or put another way, the "exposure" was worth very little.