All I can say is that it pays to take good care of the root domain if you are doing 3rd level stuff. I also do NOT link to the third level from the main level. Not entirely sure why that appears to work, but it seems to work. As far as kw's in the domain name. It's a messy situation isn't it? One engine it does work good on and the other it doesn't. I've had nearly the same luck with loading up the filenames and directories (paths) with the kw's as I have with domains named under the kw. Others have a hue and cry the other way.
As for the investment in domain names. I've split them and done BOTH. A well choosen set of domain names could be an asset in and of itself. $500 (or less) is so cheap an investment when considering the big picture, I don't see how you could go wrong.
I was considering it for this domain itself along the lines of domains.webmasterworld.com or altavista.webmasterworld.com, but I've decided against it due to the corporate name there ;)
