Hi Paul,
Thanks for the response and such detailed answer. One thing I would like to know is, we are clear that the pagerank or authority will be divided for the number of internal pages. Will it be the same case with external links too as you mentioned? I agree that some authority will be added to the external page we are linking....does that really means we are loosing some? I have seen here from other SEOs that we are not going to loose any pagerank with external linking.
Thanks