Brian,
i build websites with webpages that contain 500+ words or even 1250+ words with keyword density's close to 3 % and above and for the appropriate keywords they all rank #1.
I also feel that you should talk about the things most important to you and stay focused on the subject. Another client of mine mostly talks about car specifics in stead of talking about what the tuning will do for the car. When i correct the page by keeping it on subject he immediatly ranks better.
For my private websites i sometimes have webpages with only 100 words and some with over a 1000. They all are able to rank as high as i want them to. I also see competitors with only 100 words and some images ranking higher then i do for important keywords. I asked myself the same question you did.
My advise: stay on subject. keep your patience and above all: don't dispair. Make sure you talk about usefull information, with some keywords in it and you should be doing just fine