Stoney,
I totally see your point and do want to clarify one thing.
I don't think it's wrong to go after "big words." What I think is nuts is for the small mom and pop shop to go after "unrealistic" big words. You and I know that Joe Smith starting up a small shop out of his basement to sell hand crafted wooden flower arrangements isn't going to compete for 'flower arrangements" or "flowers."
Thus, the small business world needs to learn about realistic keyword targeting. Plus, anytime they target those little phrases from the long tail, they are also targeting the big ones.
If Joe optimizes his site for:
unique flower arrangements
wooden flower arrangements
etc...
You and I both know that "flower arrangements" and "flower" are also getting optimized for. Thus, the good thing about this strategy is that it lets them target realistic phrases that they can build their business on while they slowly target those bigger phrases.
Amazon, ebay and Craigslist all started out as teeny, tiny small businesses. They grew.
