Whitey - 11:50 pm on Apr 26, 2012 (gmt 0)

I wonder though if a lot of low quality small spam sites with few links and exact match domains might rank well because of this.

When you remove one layer, another one surfaces.

Sites that i see ranking very well on trophy terms in highly competitive verticals have very moderate and diversified link profiles.

One site - one of the largest in it's class, didn't even do any link building up to 18 months ago for 3-4 years. It was too busy clearing up pages from the previous mess it had created. It ditched it's tainted URL's and then started small fry linking and a diversified approach. Seems to be working.