"The most powerful incoming link we can ever hope to achieve –
the link that is going to have the most positive impact on our own
search engine rankings - will come from the #1 ranked website for
that keyword term."
On some level it sounds right but the more I think about it, it doesn't make sense. First of all if I want to rank for 'keyword A' why would anybody that already has a #1 ranking for 'keyword A' give me a backlink. Secondly it doesn't seem to make sense from a Google/relevance perspective because a webpage ranked for 'keyword A' linking to another webpage also ranked for 'keyword A' seems pointless and not very relevant for the visitor. There is no added value for the visitor because both webpage are about the same subject.