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I always thought PR was distributed based on the linking structure not directory structure. Is this just a new page/toolbar anomaly or does directory structure actually affect internal PR distribution when fully indexed?
However, on many sites, the PR does drop off by one for each level, so this is a fairly accurate way of estimating.
Normally, PR is indeed calculated according to the internal and external linking.
The directory structure has no direct influence on the PR distribution.
You can bury a page like 5 levels deep. Give it a link from the index page and it will have the same amount as a page on the same level as the homepage with the same link coming in.
Such a site structure just normally doesn't happen so.