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Mmmhhh,

We're seeing a similar effect in competitive search in Sydney, the term 'website designers' brings up relatively weak sites, few if any of which appear to be optimised for that particular query though they are for closely related searches.

Has G vastly reduced the influence of backlinks and turned up the over-optimisation filters?

For my two cents I'd lean towards responsive design rather than a separate site/subdomain. Its so much easier to maintain one site rather than 2 or more different versions. Stripping out content is always a ranking danger so why go there?

Automated link building? I think you'll find the majority here would advise against any such software, that kind of thing can do more harm than good.

If we accept "the first link from a page to another is the one that transfers anchor text and PR" - does that then apply just the same for internal linking as it does with linking from domain to domain?

Late to the part with this but I just can't see G penalising a site because it has too many links from articles with the same anchor text.

If that were the case we would see a lot of webmaters and SEOs arranging lots of those links to their competitors sites in order to de-rank them, thus leaving the way clear for their own sites.