In all honesty I don't think there is anyone who can say for sure what Google does, not even GoogleGuy for that matter. I'd even guess that the guys programming the algorithm probably are surprised at times by what comes out of the index.
In any case I think we can make a few basic assumptions.
a.) Google is trying to weed out "spam" from their data base, or try to discourage the use of certain optimization techniques.
b.) Links TO a website still play an important role in determining PR and probably where pages appear for certain searches.
c.) Anchor text throughout a site AND from different sites will be used to determine what the site is about.
Ok, so here's my guess.
Links with the exact same title from within the site probably have little significance, or are counted as just one link.
Links from outside the site (external links) with exact title probably count significantly as they could not penalize your site because others decided to link to it. If so then your competitors could simply establish lots of domains with different IP addresses and use them to shoot you down.
The idea of NOT using exact phrases that match the title while linking is probably the best idea in that it *appears* to be a natural link and not one that was agreed upon by webmasters.
For example, if your page title is "delicious small blue widgets" you may find some people who link to you (naturally) with just that phrase, but you would probably find lots of others linking to you with things like