Is There A Difference Between These 2 Backlinking Strategies?

I'm a fan of strategy #1. Even better, do both =)

If you build 500 links on your site, with all of those links going to internal pages, it would result in an unnatural link distribution. "Normal" sites have most of their links go to their home page.

My suggestion would be a combination of those two approaches.

I'd build the majority of links to your home page. Then from your home page you can start linking out to the rest of your site to transfer link juice internally. You could have links to all of your internal pages on that home page (using jquery or some other method to present all of those links in a user-friendly format). Or you could further breakdown your internal pages.

For example you're first category can be services. So link to each of your service pages from your home page. And then from those service pages you can link to the geographical-based pages. Something like that.

Then, with the rest of your links (maybe 30-40%) you can build links directly to each of your inner pages.

Of course don't forget about anchor text diversification as well. Use an actual, verbatim keyword only a portion of the time and other anchor text (derivatives, synonyms, generic text like click here, the URL, etc.) the rest of the time.

Actually, if I am understanding what you are saying, that is not correct.

So you want to create a county page and then maybe on that page of links to 20 towns, for example... Those 20 links no matter how you organize them, are not equal.

The PR that is spread through links from that page does not get evenly distributed among the links. There have been a lot of tests on this. I have done a couple myself. Google clearly puts different values on each link.

For example, the closer to the top of a page a link appears, the more powerful it is. You can see this for yourself many times if you visit a high PR homepage. Let's say that page is a PR 5 page and it has a navigation across the top. Whatever page is first linked to will get more linkjuice than the rest of the links.

Let's say the options across the nav bar from left to right are, About, Category 1, Category 2, Category 3, and Privacy Policy.

Often the "About" page will also end up a PR 5 or 4. Sometimes (depending on how strong the homepage is) Category 1 will end up as a PR 5 or 4 page. Often by the time you get to the last one (the privacy policy in this example), it is a PR 3 or 2 page. Sometimes even a PR 1 or PR 0 page.

Now if all the links were "equal", this shouldn't happen.

Strategy 1 works for me. Also What Mike suggested here is interesting. I have seen some sites, where their About Us page does have a strong PR of 4 or 5, which is really great.