Internal vs. External link

Is an external link any more valuable than an Internal one?

[MikeNoLastName]

I've read all the algorithm descriptions and various arguments on this forum, so let's keep this simple. Assuming everything else is equal, in so far as anchor text, other page content, etc.
-- Has it ever been researched and proven one way or another that an identical, say PR4, link from page A on my OWN domain to a page B on my domain is really any more or less valuable, in so far as determining Google Ranking, than the same link from ANOTHER domain?
I'm not talking about adding or losing overall domain PR (i.e. PR gain/drain), that's obvious, only the affect on that certain Page B and it's ranking on the search engines, particularly Google.
If the answer is No, there is no difference, then what is the use in why some people create hundreds of domains and interlink them supposedly to impress search engines, as opposed to simply creating thousands of pages on the SAME domain and interliking them, and why then does Google care about such practices which I understand is discouraged?
If the answer is Yes, there is an advantage to having an offsite link over an onsite link, then why not simply create a new domain for every page on your website, and interlink them just as you would on a common website and why would SEs like Google frown upon it as long as every page/domain is new and unique?
i.e. widgets.com -> red-widgets.com, blue-widgets.com, white-widgets.com.
If you believe the later is the case, then take this a step further, where is the line drawn to determine if it is a new domain as far as:
aaa.com and bbb.com
vs
aaa.mydomain.com and bbb.mydomain.com
vs
pickyourfavoritefreehost.com/~aaa and pickyourfavoritefreehost.com/~bbb

[allanp73]

It used to be that all links were valued the same, but with the advent of local rank this has changed.

[MikeNoLastName]

So then you're saying an external link IS more valuable than an internal link?

I'm assuming then this is why the SE's discourage cross-linking, recip linking and link farms, because it screws with their otherwise efficient algo.
But how could a search engine draw the line and objectively fault one domain admin vs another for simply creating multiple domains, say blue-widgets.com which talks about only blue widgets, red-widgets.com which does likewise for red ones, etc. and then link them all to one called widgets.com which in turn links back to each of them when that info is covered and call them a crosslinker or link farm?

I see Yahoo doing this with their shopping.yahoo.com, finance.yahoo.com, etc.
MSN does the same with autos.msn.com, careers.msn.com, etc.
and even Google does the same with groups.google.com, news.google.com

And yet none of them penalize or wipe themselves off the index for being link farms!

Where / HOW exactly do they draw the line?
If it is not totally objective doesn't this leave them open to major legal discrimiation issues? Yes you can state their "policy" which says we reserve the right to list who we want..." But, in the end they ALL claim N% of web browsers flow through our engine. With this type of collective near monopoly, (and if all of them are doing it, then collusion), isn't federal regulation in order?
Gee, I wonder what would happen if they all applied the same rules and refused to index that famous "white colored domicile".gov website (a PR9) because it constitutes a link farm with all those other .gov sites, which it's administrating head, ultimately funds and runs linking to and from each other. If they don't ban that one I can't see how they can possibly justify banning ANY others based on cross-linking.

[europeforvisitors]

If it is not totally objective doesn't this leave them open to major legal discrimiation issues?

Not in the U.S., where their opinion is protected by the First Amendment.

FWIW, SearchKing sued Google in federal court last year after receiving a penalty from Google, and the lawsuit was dismissed.

In any event, Google can solve the crosslinking problem without penalizing anyone: All it needs to do is remove any advantage that sites receive from crosslinking (or excessive crosslinking, with the definition of "excessive" being determined by Google). That's something that definitely needs to be done, to judge from some of the results in the current index.

[MikeNoLastName]

Google is far fairer than some of the others it seems. Maybe why they won. Or I guess Searchking just didn't have enough high-paid lawyers like the feds can afford. Perhaps everyone out there reading should link to "that white colored home".gov using text directly from their home page and we'll see how long it takes the SEs to change their algo or admit they aren't equally applied. Actually there's a major cross-linker / spammer (based on the SEs automated algorithm definition) FAR worse than them, called "first gov. gov" (leave out the blanks), they're a PR10, with 140,000 backlinks ALL from other .govs! Anyone of you out there ever link to THEM? Sounds like a bona fide link farm to me!