You are certainly right that on-page elements alone won't make a site rank first for highly competitive search terms - and John's method of brute force links and anchor text is one solution.
However, that doesn't preclude other possibilities - *if* Hilltop and themes are to be accepted to play some role (and they may not) then there's room for a far more selective strategy.
In this way, an "on-theme" link exchange program could attempt to take advantage of issues such as theme implicitly, and "expert pages" from Hilltop (If they can get away with it). But link exchange alone is not likely to be of overwhelming benefit - it really needs to be part of a wider SEO strategy.
Interesting, though - there is actually a "Topic Sensitive PageRank" - linked to it discretely - here's the full paper at Stanford:
Dan Thies has suggested that TSPR is playing a specific role in the post-Florida results.