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The short answer would be that ranking is more complex than that.
Also look at:
Have you tried getting links from a gemological institute?
Make a real world comparison on the the three C's of diamonds, with videos of real women trying to tell the difference. Ask bloggers, gemological institutes and other jewelry stores to link to it.
Costume designer?
If you design some of your own rings then you could work with a costume designer to make some simple jewelry. Ask for a link for your efforts. Maybe write a review of their recent play, and ask for a link from them on it.
Wedding Planner?
Not sure how this one would work, but you might!
Photographers?
Offer to use some of your really nice jewelry in some staged pictures. Ask the photographer for credit on the jewelry in the photos.
Florists?
Every woman loves the gift of flowers and jewelry, why not find a way to work together? You could also write an article about choosing the best flowers for the occasion, and ask for links from them.
You could also create a gift widget. Submit the event, preferences, price range and the widget would produce gift ideas. Embed a link to your website from it as the source, and try to get people to put it on their website.
For any of these people you could offer some SEO advice in trade for a link on their website.
As for your actual question, it's all about risk vs reward. Some companies try to go after links in a very natural way, and some companies just try obtain links. The first is going to be very beneficial, but quite expensive. The latter will also be beneficial, but carry more risk. It all depends on what you are looking for.
This was on my Christmas list, but it didn't seem to happen:
Ask for an example of a website they've worked on, and do an SEO background check on it.
I check my rankings three different ways.
By using three different options I'm able to see exactly where I'm linking. In the off chance that I still think its off I will ask a couple of friends to search it.
That being said, location does have an affect on rankings. Google wants to find the most relevant item for you, and location can be a determining point if everything else is equal.
Three websites means:
Three websites do sound tempting until you realize that you will not be able to benefit from each area driving its own links. With a single website you will be able to receive the domain benefit for every link you generate, while having multiple domains you will not.
Another problem with linking to other websites all the time is the drop in link juice. While it may seem beneficial to pass links from your websites, you have to remember that you are giving away some of the value of your internal links each time. With just a couple links its no problem, but with dozens you might face a dilemma.
I would stick to the one website with landing pages for each area of interest. I would then do an intense link building campaign for each, and write a very informative blog (to both drive visitors and links). By having high quality landing pages for each "department" you will be able to achieve all your SERP goals, and be able to build on each "departments" success.
The only reason I wouldn't do this is if I was going to have 1000's of pages of content for each department.
Write the be all end all resource for each of those topics, citing your sources (as long as they have a high authority level). Don't try sell yourself within the article, just write it about the topic. Then, ask other people in your field to review your resource, and see if they would suggest making any changes. After you have made a couple alterations, ask them if they would link to your resource from their website.
Then, do some "inurl:".edu" life coaching" searches to see if there are any universities talking about the subject. Send an email to a professor in that department asking them to link to your resource.
Don't focus too much on exact keyword match, just get them to link to it.
These deep links will help with your overall domain authority, which puts you at an edge to rank overall.
Yes, Google will knock you for it.
Start with your most popular product, and work your way down. Also, make sure you write the content for the consumer, and not for your company.
Another suggestion I would have is personalizing your website. Brand yourself as an expert within the content, and mark the products that you suggest. If you have a favorite hammer, make sure people can quickly identify it.
For references, check out Gun Dog Supply http://www.gundogsupply.com/
Infographic on where the vast majority of tickets are handed out in a city? Hot means the most tickets, etc. Not only are you offering a service to your customers with great insurance rates, but you are also telling them where they need to slow down!
Include this in all your city specific landing pages to try use as link bait. I'd also include local pictures from those cities, using file names that describe them well, in order to seem much more relevant.
For Internal links:
Use footer links for your most important cities, and a chart listing where you do service for all of your cities. By using the chart on enough pages you should be able to imply that they are your most important pages.
From the Matt Cutts video I saw earlier: http://www.youtube.com/watch?v=c9vD9KGK7G8&feature=player_embedded
It seems like it would be better to put the Geo specific pages on a subdirectory of your website, and geo target it with Webmaster tools. Then, you can start building local, and relevant, links to that page or directory.
Article submission used to be the bees-knees (is that how the phrase is spelled? Anyway...). However, what you will really generate is a whole bucket load of duplicate content on the web. To make matters worse, it's unlikely your articles will get picked up.
A better use of time is:
Seems to me that you have a few easy options.
1. Write unique content for all of the pages.
2. Use "canonical tags" to tell the bots which is the original source
3. Use a standard page for all of the different departments
3 and 4 all the way. There's a bunch of ways to peel a potato!
The best incentive you could possibly offer is great content. Something that truly benefits their readers/visitors. But the non-utopian answer would be what Shannon said - free random offline item that isn't really e-traceable and is inexpensive.
On a side note, I may give you a link for the gallon of milk thing... just saying...
Other options:
Use reviews on your product pages (I'd suggest utilizing Schema markup - http://www.schema-creator.org)
Hiring out to college kids looking for a few bucks
Hiring freelancers
My favorite one is creating a PDF of a resource for other people to use on their website. Inside the article I will have my website linked from the keyword phrase I want. They upload the document, because it's helpful, and I get a link.
Truth be told, I just started doing this, but I've had a good response so far.
Another option is trading a SEO white paper in exchange for a link.
Here's a good video on it: http://acumenstudio.com/articles/2011/09/exact-match-vs-partial-match-in-seo-today/
You will want to start diversifying your anchor text. Start contacting some of the webmasters that you have links from, and ask them to change the anchor text.
Welcome Tani!
As you could probably guess by my name, I work in the auto industry. Which you would assume is pretty competitive. Well, when I do my keyword research in the Google Keyword Tool, I'm greeted with .9's usually. This sounds extremely daunting, but it really isn't that bad. When I hop onto the keyword tool that SeoMoz offers, I get a 34%. Now, that sounds really friendly!
So, my strategy is to generate my keyword list in the Google Keyword Tool, download the CSV and use excel to manipulate the data. Once I discover the keywords I want, I run them through the keyword tool here at SeoMoz. I know there is a way to just automatically do all this in Excel, but I've learned that I really don't know how to code in it. Anyway, I then copy over the stats I get from here to the excel sheet for another column of data. Finally, I look at what might be worth ranking for, in the short time, out of those keywords. From there I will visit the top 10 sites, and see if they are doing things correctly for on page.
Depending on that stat, and my current websites stats, I will decide to go after a keyword or not.
My gut instinct tells me to choose the one utilizing the .com/exact-match/
This coming from a customer perspective. When I search for Diving Equipment I'm going to want the phrase, or something similar, in the url. Of course, both of these match that idea. However, the second one allows me to read it as one piece, and my subconscious is more likely to perceive the page as such.
As for the search engines. Using the latter one will give a more clarified answer to what this page is about without additional context. The only point where I would see it being too complicated is from the length of the url; especially with blog posts.
http://www.dive.com/blog/The-Absolute-10-best-scuba-diving-accessories-in-2011/
*That being said, I have no documented proof of such, and have never seen a case study for it. It's just simply my interpretation.
Local Search results are just another vertical of Organic; that's why local and traditional verticals occasionally combine.
2. From the perspective of controlling the SERPS, and having multiple listings in each search, Youtube wins. However, as other's have mentioned on this same post, that listing will be to Youtube, and not straight to your company. You then have to contend with that user's urge to continue on Youtube when trying to get them to your website. To me, this is a problem.
Instead, I would use hosting company that allowed you to actually have the video on your website, and not just frame it in like Youtube or the basic Vimeo. This will make the video count for content on your website, as well as allow you to have the video rank in SERPS. Check out Wistia, as previously mentioned, or Vimeo PRO since both of these will allow you to properly place them on your domain. I would also suggest using Schema markup for these videos. Doesn't hurt to swing for the rich snippet fences!
I like doing "intitle:"city" directory" searches. such as: intitle:"Boise" local directory
Another search I would use is: intitle:"links" life coaching. You can find some resource pages from people, and try get a link on them.
Thirdly!
Write all your local information in Schema (schema-creator.org). I've only done this with four sites, but I've had good results with it.
-Maximum number of internal links on a page
Depending on how powerful your site is, I would suggest keeping it around the 100 links mark per inventory pages; at least initially. If you offer the ability to see more products at once that will keep all of your customers happy. However, the fewer links per page, the more power you send down to your product pages. If you start building links to these product pages, though, that could become irrelevant - depending on competition. If you still need to give extra boost to specific products, look for ways to link them internally from other pages.
-If Google frowns on really long category pages
From what I read, Google doesn't really consider the navigation pages to be very valuable content. However, I would only be concerned with that if you were trying to rank your search pages. So, I would focus on what your potential customers would want. If you feel like you need to rank for a specific phrase, generate a landing page that leads into that specific inventory search.
-Anything else
I would suggest testing multiple designs. It's easy for us to tell you what you should do, but it's better to hear it from your visitors. Also, don't spend a lot of effort trying to get a specific search to rank, instead create a landing page for that product category, which will then lead into your search. You will have a lot of unique content on there, and your customers expect to see a landing page.
I've talked to a couple people that have said that 301's will pass on the penalty. A better alternative would be to try move the links over to your new website in waves. If you experience a drop, then you know the link exists in that group. Just do some quick checks on their domain, and see what you find.
Of course, if you are working with 10,000+ links, your batches are going to have to be pretty large.
Then again, if you don't have more than a couple hundred, go through the various domains, and try to identify problematic links.
1. Age of Domain
2. Inbound link keyword usage
3. Keyword usage
4. Relevant words around Keywords (minor correlation from what I last read)
5. How often content is updated
Here's a little breakdown from SeoMoz: http://www.seomoz.org/article/search-ranking-factors
I would add another phrase to your Title Tag that is similar to what you are going after. This will add relevancy to your website, which has a slight positive correlation to rankings. In addition, make sure that you are getting links with the exact phrase you are going after, as well as others that are similar. In addition, you will also want some no-followed links in the mix just to be diverse.
Personally, I would do subdirectories just because its easier to say. "yoga (dot) DenverStudio (dot) com" instead of "denverstudio (dot) com forward slash yoga"
However, I've only read about the benefits of sub-directories within very large websites, and wouldn't know what the benefits of a smaller website would be with it. Although, www. is technically a sub-directory, and most websites use it.
A Second Alternative would be to create two different funnels. One for customers in CA, and the other for the customers in UT. You would then have to create landing pages specifically for each City, State in order to most efficiently utilize the system. So, your current home page would be for brand searches, a CA landing page for those keywords and a UT landing page for those keywords. This would cost you quite a chunk to build, unless you can do it in house, but you would have the benefit of your current domain authority.
Just as a reminder, there are many different pieces to the SEO puzzle, and my offered solution may hinder you in achieving the results an a very competitive market. If you do have stiff competition, or anticipate any, than a new domain would be the best answer.
Either way, you are going to have to do some on-site SEO, like Ryan said.
For terms about the same topic, as you just wrote in your A/B example, I would utilize one page. That is, one page for "Dental Implants." The reason being, your content is going to be relevant for terms regarding the same topic, and your link profile will be built with many variations of the term (Dental Implants in Boston, Boston Dentists who do Implants, etc.)
Back to your original question though, you will want a seperate page for each individual procedure.
yourwebsite.com/boston-teeth-whitening
yourwebsite.com/boston-dental-implants
I would just make sure to use the keyword phrase with the most traffic in your url (depending on overall length of url). The benefit seems to be getting smaller as time goes on, but that's what people are looking for when they search.
Sadly, I'm in Montana, and have very few bushes around, so option D) is out of questions 
How is the new domain ranking for other keywords? Maybe like 4 slice toaster, or whatever phrase gets a lot of traffic? If it's ranking high for other phrases I would use it as a temporary test dummy. Pretty up the website, and find out which phrases, designs, etc. convert the best while you improve your original /toaster website. Once you have all the data you need, and a highly improved /toaster page, just 301 it over.
However, if you don't have that much time, I'd just 301 it over, and go on with your day. There's always room for hopes and dreams, but this whole 24 hours in a day thing can get in the way if you don't have help.
If you choose to redirect, I would definitely put it on the inner /toasters page. It looks like you already have a good amount of links pointing to your home page, and not many to the inner page.
Yahoo uses Google in Japan (not that you, or anyone really cares).
First off, if the keywords are pretty related, having similar synonyms, then it can be pretty easy to rank for all three.
For Example, I used my home page to target: Car Dealerships City, City Car Dealerships, City Used Cars, City State Car Dealerships, etc.
Since all of these are so relevant to each other, it made things as easy as just talking about my business in my city-state.
However, my internal pages are very specific: City state auto repair, city state car rentals, etc.
Point is, if your top three keywords are about the same topic, then it can be easy to rank for all three on the home page. However, if they are different, and highly competitive (Diets and Gyms), then you are going to need to split up the content into different pages to rank well.
As for which pages you should focus on, it depends on your current rankings, and traffic. If you currently rank pretty well overall for your home page, then get it bumped up to the top to increase traffic. After that, start working on all the other pages.
If you aren't ranked well yet, and you don't have much traffic, then go after a niche phrase with decent search with all your internal pages. This will help your bottom line more - easier conversions - and still help your overall domain authority. I'm having to turn around, and do this with all of my websites that I took over (In-House SEO).
The best practice is to not let your internal search get indexed. Use no-index,follow so that Google can follow any links on the page, but doesn't place your search pages in the index.
Reason why: duplicate content
How different is a search for "kitten" going to be from the search "kittens" on your website? Probably pretty exact. However, they will possess two different url's. Ta-da! Duplicate content! Not to mention:
Kittie, Kitty, Kitties, cute kittens, funny kittens, black kittens, grey kittens, cat, cats, etc.
For proof, go check out your google analytics, how many different ways are people finding you right now?
Do you have a decent amount of links pointing at these internal pages currently? If not, that would be the second step (after the menu problem).
Link Building is starting to be a transition back to College. You have to write high quality content that identifies, and utilizes references. In addition to just being structurally, grammatically and intellectually sound, you also have to have it fill a niche within your market.
For example:
You notice that several university websites have an incomplete analysis of the water shed on a predominant mountain range in their area. You could collect resources online about this topic, and write a complete analysis of how it effects the people around it. You could then request links from these universities to link to your complete article. After you go through the 15-20 relevant universities you could start contacting the cities, real estate agencies and some guiding services to link to your article.
As long as you write a high quality piece of content that people will find informative and enjoyable you should generate a few links. Of course, I would suggest picking a more interesting topic, but this is just hypothetical.
That being said:
I would suggest The Interenet Marketing Ninjas (formerly We Build Pages) and Virante. Both of these companies have reputations for being great link builders, but you pay for high quality safer links.
If you aren't overly concerned with the risks, and you have a smaller budget, you could also talk to a link broker company like Text Link Brokers, who will assist you in purchasing links (which is a no-no if found). I don't mean to alarm you, Text Link Brokers is a great company that doesn't give out their client info, but it would be careless of me not to mention that there is a risk.
This really depends on the difficulty of your keywords. If the market is very competitive, then don't expect to rank in the top three very quickly with a brand new domain (it can be done, but it would take a lot of planning with link bait, and amazing execution of social media). However, if you are in a relatively easy vertical, you could end up ranking twice in the same search (bonus!).
I would suggest:
Using the old domain
301'ing, or reusing any highly linked pages
submitting a new sitemap
Gaining a bunch of links to urge re-crawling
Having a sit down with the client before to explain possible short term ranking drops (Which sucks! They don't want to understand why)
Not checking the rankings every 30 minutes if drops occur.
How's your internal linking structure?
Do a site: domain.com check to see how Google perceives your internal linking. Are your relevant pages on the first page of your site search? If not, you may have an internal linking problem.
To check this I used a web based program to find all the outbound internal links of each page on my website (only 200 pages). I then transferred this data into Excel where I sorted it by page. From here I was able to see that my most important pages had 20 less links than the unimportant pages in front of it. I then went through my website adding additional links to my important pages, using the same keywords I was trying to rank them for, until they had the most internal links pointing at them.
Internal linking is typically a problem with websites that didn't plan ahead for SEO.
Ryan Kent always has an awesome explanation for this type of scenario, so hopefully he drops in.
Anyway,
As long as you have it organized properly you should be able to make an attempt at ranking any phrase you want (I say attempt since you still have to optimize after creating the site).
I've ready a couple of Ryan's posts about the reasons for using /folders or subdomains, but I can't seem to find them right now.
The best solution would be to work within your Content Management System to provide the best possible Title and H1 Tag for your customers, and then use an auto-generator to produce content. I work with companies that have less than 1000 products, so I don't have a lot of experience with the auto-generators, but it will give you a slight benefit.
If I were dealing with that many DVD's I would make landing pages for each Genre, some for major actors/actresses and major directors, and go after those niches while I hammered out the issues with my content management system.
The biggest con for me is the anticipated response time on questions. When people ask a question on a Social Media site they expect an answer in less than 15 minutes. Sometimes I happen to be sitting at my computer, and that's no problem. However, most questions happen early in the morning, and late at night (auto industry). Because of that, I'm typically not conscious or coherent enough to answer questions about towing capacity, cubic feet of space, etc.
However, I've been able to connect with some people on a personal level, and have been able to get them to come in for service and repairs.
Bottom line, it can improve your bottom line, but the chance to lose a customer is there, as well.
I work at a Toyota, Scion, Chevrolet and Cadillac dealership, and the format that has produced the best results for me are:
[Year] [Make] [Model] for sale in [city] [state] | [Dealer Name]
As long as you aren't in my area I have other suggestions, too 
Contact all the webmasters that linked to your blogspot blog, and ask them to change the link over to your website since the resources will no longer be there?
Mobile apps are a must if you are doing this, I agree.
Personally, I would pursue a better link from them, right within the content. Don't just get even, get ahead 
As for the .Org being better:
From what I've read in a couple blogs, I've never tested this, it's not that a .Org is just better. What makes .edu's and .Org more desirable is that they are typically more authoritative sites. A typical university has a 80+ Domain Authority, where a .Com will vary greatly.
I personally also like using schema to designate a local business:
Click Organization and select local business in the drop down.
For years I would put "Expert with Excel" on my Resume because I thought I knew it all. Now I know that I only understood the surface of a gigantic beast of a program!