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I was checking some keywords for a particular site, and noticed my primary site on page 1, then a highlighted listing which drew my attention on page 2 of the SERPs.
It was a completely different site of mine, and after looking at the code, I realized I had used a photograph from the other site and had forgotten to change the Alt attribute.
There was No Other reference to the keyword on the page whatsoever, other than a large JPG with the keyword in the Alt attribute - so that's proof enough for me that it is at least 'part' of the algo.
Steve