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Search Engines used to have trouble with frames, but they are becoming much better at being able to read them. The same thing goes for dynamic pages. Search Engines did not like indexing dynamic pages, but are doing more of it now.
If your competitor has any text on the page that is not visible to a visitor and is solely on the page for search engine purposes, then it is spam (in my opinion, but opinions differ).
Related to this question, there is a site is linking to mine, but the link to my page is in the main frame (let's say it is main.htm). The actual index page (the one that the main page is inside of) has a PR 6. However, I went directly to the URL of the page that had my link (main.htm) and it was a grey bar. Has anyone else noticed this? In my opinion, the home page (index.htm) only has 2 links on it [header.htm and main.htm]. So each would get 1/2 of a PR6 (minus a dampening factor). But this does not seem to be happening. Does anyone have any opinions? (I checked and he is not blocking the main page with a robots.txt file).