It is confusing and it's something I was wondering when I first saw the Matt Cutts, Feb 2013 video. From what Matt says:
- We know that a link won't pass all the page rank. Some page rank disipates over each link.
- the amount of page rank that dissipates though a 301 is identical to the amount that passes through a link.
But, I guess the problem with understanding this is that you can't take 301s and links and consider them in isolation. It's not an either/or.
Consider the following:
1. Page 1 -[link to]-> Page 2
Nice and simple, page 2 gets it's full entitlement of page rank ( taking into account share/link and dissipation)
2. Page 1 -[link to]-> 301 -> Page 3
Now I've got an extra step. Does this mean that the page rank that Page 3 inherits is affected by both the link and then the 301? Does the page rank dissipation happen twice?
If, say 50% (not real numbers!) of page rank value is lost for each link/301, then the original link to the 301 would lose %50 and the 301 would lose the same, (50% of the 50%) which means that page 3 get's just 25%
What if I end up in the horrible situation of having
3. Page 1 -[link to]-> 301 -> 301 -> 301 -> Page 3
Does page rank decay happen on every redirect?
Personally, I've only used redirects where necessary and, where I can, I've tried to get inbound links updated to point to the correct page.