Finally, I got tired of it and have set out to do a boilerplate test over the next 6 months to see which is which and report back here from time to time to keep everyone in the loop.
Those of you that want to chime in and offer your input, thoughts, questions, fire away. I will try to answer all of your questions as best I can so we can once and for all give this some empirical evidence one way or another.
The URL that I own is www.Vacation.Rentals
The first subdomain I am going to create is Colorado.Vacation.Rentals
On the flipside, I will also create a subdirectory for https://www.Vacation.Rentals/Rentals/Colorado
I will test out by city and state to see which one responds the best to this test.
It is my belief (right or wrong) that the subdomain will do better pushing up my main site than the directories. Could be completely off base with this, but I am going to give it a shot all the same.
Will report here once a week with screen shots taken from Link Assistant to follow along with.