so ideally your looking for pages that are well linked and in good neighborhoods ...this is where the difficulty lies ....

That's the ideal, but imo and from what I've seen, at some point relevancy breaks down when you become too strict. This is Google's strength in that they keep the user experience as their goal and the weakness in the Yahoo algo in that it tends to get hung up on strict and unrealistic parameters that ultimately affects the usefulness of it's results.

There are many quality hoops to jump through with Google, I don't want to diminish that. This is my opinion, but it seems Yahoo is slashing at spam with a machete and Google strikes a finer balance by evaluating the usefulness of the results rather than focusing on pure metrics. Just my personal opinion. That's a very very general appraisal and there are examples where spam gets through in both engines.

No question there are difficulties depending on a niche, but that's where you assess your resources against your strategy and adjust it accordingly. Just like any other endeavour. Not everyone has the resources to run a horse in the Kentucky Derby. Why should the Internet be any different?

Let's make it simple.
edu pages need to be directly supported from the top parent or by other trusted sites to have true outlink value.
Bridges can be built between them, but it is complicated.

Would you expect Matt to say anything other than that?

Not really and its nothing that I hadnt considered, personally I always like like from .edu and .gov sites as IMO this shows your site as being quality.

best content, i have read addressing this issue so far is p1r's citing of the patent right out of horse's mouth:

[webmasterworld.com...]

in short, .gov and .edu links are trusted due to the parameters by which they are administered.