Forum Moderators: open
Yes, youv'e hit the nail right on it's head! Happy that you increased your PR by a point!
The reason is that Google only counts backlinks (or inbound links for that matter) that are 4 or above.
So, you are 100% right: on the next Google update, you will see a lot more of your internal linking appear in the backlinks results in Google.
Mean time, let's all go back and continue what we do best: create great content for the next update!
:-) SEO
Just to clarify ... Google ony REPORTS links to your page that are PR4 or above (so far as we can tell), but lower-PR links are still taken into account when Google is deciding how to rank your site. It takes more lower-PR links to give you a boost, but every one helps.