Journal employees offering free publication in return for co-authorship and citations: is it a scam?

This is a scam.

You are not the ones being scammed, however. The editors are proposing to scam your readers, with your assistance, making you scammers as well. Walk away before you damage your reputation.

Whether or not this is a scam, it is completely unethical.

Under no circumstances is someone entitled to a publication credit in exchange for "free" publication of a paper. Don't forget that many reputable journals do not charge publication fees. It may be entirely possible for you to get your paper published without such an arrangement, which will be better for you, largely because any journal whose employees operate in such a manner isn't worth publishing in.