Great question Dan. @Jesse, you are on the right track. I think the question was misunderstood.
The question is, if seomoz.org links to Amazon.com/nakulgoyal and that page does not exist, is there link juice flow ? Think about it. It's like thinking about a citation. If seomoz.org mentions amazon.com/nakulgoyal, but does not actually have the hyperlink, is there citation flow.
So my question to the folks is, is there citation flow ? In my opinion, the answer is yes. There's some DA that will get passed along. Eventually, the site owner might identify the 404, "which they should" and setup a 301 redirect from Amazon.com/nakulgoyal to whatever pages makes most sense for the user, in which case there will be a proper link juice flow.
So to clarify what I said:
**That's my opinion. Think about it, the 301 redirect from /urldoesnotexist to /urlexists might get added 1 year from now and might be mistakenly removed at some point temporarily. There's going to be an affect in both cases. So in my opinion, the crux is, watch your 404's and redirect them when you and when it makes sense for the user. That way you have a good user experience and you can have the link juice flow where it should. **