Search engine ranking question

Well, here we go:

I was doing some keyword research and added around 1k keywords to my site after doing some keyword research. I lost a lot of ranks now in google. From page 2 to 12 and much worse for the major keywords.

I think the reason could be that as I have more keywords, the relevance of every single one goes down.

Okay, let´s take this a little further:

If this assumption is right, the normal way to get traffic from the SEs would be:

Have 3-5 Major keywords (perhaps up to 10)

For every other not so relevant keyword but with less competition, build a suite and rank it separately ( faster and less expensive: Keyword optimized article with anchor keyword link).

This way you don´t lose relevance of your major keywords. Get a backlink to your main site.

Am I on the right path guys?

If so, any proven suggestions with how many main keywords I should have? Is 10 a riskless number or should it be 3-5 or even only 1! ? Is there a recommended ratio or a formula that contains the relation to the number of competition sites in the equation?

Thank you very much for your assistance,
Martin