Page Rank Distribution
I was at an SEO seminar recently and was told of some reseach the speaker had done to determine how page rank was distributed & how it could be managed within your site.
In a very simplified version, here is what he said.
Page rank will basicaly filter down from pages linking to your site, so in simple terms, if a page rank 8 site has 1 link from it, the site it is linked to will also be given a page rank 8, 2 sites linking & they will both get PR4 etc.
However if you use the nofollow tag on internal links, these links will not pass PR, and the rank will be distributed exlusively to other links from the page. See the diagram below:

Thus by using no follow links to less important pages internal links can be built to favour your most important pages from a PR perspective.
Interesting, I thought.
October 24th, 2008 at 4:04 pm
Reading a recent answer by Matt Cutts to a question on this issue, I can now confrim that this assessment is correct, and the Google do consider this practice to be perfectly legitamate.
See the link below for the full article
http://www.seomoz.org/blog/questions-answers-with-googles-spam-guru