In fact, onpage SEO is important, and I think you can rank good for keyword phrases, that have few competition. But there's the limit. At least concerning google, where most of free SE traffic comes from. For google the incoming links are more relevant, so much that even sites with NO relevant keywords on it can rank #1. I have seen it with a big movie site.
So according to this i have read also the phrase "Backlink is king"
Another thing, concerning 1 million other sites linking back with the same anchor text - google has learned again shortly...they are knocking sites out of the top 1000 for certain keywords. This has happened to some well known SEO experts shortly. So, caution!