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Would people suggest large text can work as well as h1.
Search engines are looking for relevance, and even though the H1 tag may be a poor indicator of relevance today, the H2 tag is still pretty good. Stupid people just don't "get" what H tags are all about. Use them properly and they can help make the topic of your page and the sub-topics of its sections very clear to an algo.
Now about the CSS issues. If you have your css declarations in an external file, how does any search engine know about them? Are you seeing .css files being regularly spidered? I'm not.
And why would search engines penalize for using css as intended? I would think that any boost you see is either a temporary effect (fresh listing) or due to some other changes. I HIGHLY doubt that Google wants to see browser default rendering of H1 text. Why would they care about aesthetic/visual issues at all?
Answering your thread title exactly, I think that today, large (or bold) text may even work better than H1 elements for optimization purposes. I think H1 text is weighted just about the same as any old text would be -- if certain words are the first thing on the page, then that prominence may be what helps, but not the fact that it's in an H1.
[edited by: tedster at 4:56 pm (utc) on Oct. 12, 2003]