So if I use the keyword tool and it comes back with a listing for one that shows a search of say 1000+ , Article Power of 8.1, and PPC of 7.5 and another that shows a search of <10, AP of 10, and PPC of 9.6 which is better?

Berny you are exactly right. :)

The competition are sites that target the keyword phrase. That is they have it as a keyword or heading on the site. If you just type the same phrase into Google it pulls up every site that has any single word of what you've searched for anywhere within the entire text on the site.

To use a specific example, a phrase at random (and nothing to do with my niche) "eco friendly building material". Jaaxy or the keyword tool will tell you this has a competition of 317 sites. Type that phrase into Google you get 6.7 million hits. What has google given you? Every single site that has the word friendly. Every single site that has the word building. Every single site that has the word material. Anywhere on the site.

Your competition are sites that use that exact phrase as a keyword, not just random words within the text that could be related to any number of things.

Read your competitors stuff to get great ideas?!

looks like you are either jumping ahead too far of the classes or you need to go back a step?
Have a magic day!