Everyone knows that other sites that link to your site helps in the SEO process. Everyone should also know that reputable sites will help you while some other sites will actually hurt you. How do know differentiate between these two types of site though???

There is no such thing as a bad incoming link. The worst that can a link can do is nothing at all. It only gets better from there. If this wasn't true your competitors could ruin you by linking to you with crappy sites.

And it should be very easy to tell if a link is good or bad. Look at the site/page it is on. Is the site any good? Or does it suck? Does it rank well? Or not? It really is easy to tell.

Using seo tools will help you get which the best backlinks to your web site.
there are many free tools but the best way is to get a software that will manage your building links campaigns.
high quality link is determined by the page rank and the number of the outbound links.

That's not correct. You limited your definition to cover exclusively PageRank which is a mistake. PR is just one of hundreds of factors in determining a page's rank and has virtually no influence on link quality. If a page has high PR but is offtopic that link is virtually worthless.

A high quality link is from a page that has content related to yours, uses the anchor text you hope to rank well for, ranks well for the terms you hope to rank well for, and has a high PageRank.

The page rank affect the quality of the backlinks. and there are many difference to get a link from a web page with PR=7 than a web page that have PR=0.
page rank is the first thing for people to determine the quality because we have not the exact formula used by google and we have not tools to do this job.
- anchor text is not related to backlinks quality when you will link to another web site.

Completely untrue. PageRank only indicates a page's link popularity. It does not indicate the quality of the page or the quality of the links on the page. Relevancy plays a much larger factor then PageRank as does anchor text. A link from a PR7 page that is off-topic is worth less then a link from a PR1 page that is on topic every time.

The reason why people consider PageRank the most important is because they don't know any better. That's why those same people start threads here saying, "My PageRank is so high but I don't rank well for my search terms". It's because they were after the wrong thing. They clearly don't understand PageRank and what it really means.

And anchor text matters a lot for inbound links. It's effect is huge. And it plays a role in your outbound linking as well. That anchor text is on your page and affects how your pages are viewed by Google. If your anchor text contains words you want to rank well for it is better then if it contains terms that are unrelated to your website. That's one reason why linking to unrelated sites is bad for SEO.

I believe you're contradicting yourself stymiee. First you say links don't matter and now you're saying they do?

I've never said links don't matter. They very clearly do. I just said PR is not an indicator of link quality.

Not all links are created equal. Using PR to determine link quality is an inaccurate system to do so. The other factors I mentioned above is what someone should be using instead.

Better let Google know this ...

Google : ... Don't participate in link schemes designed to increase your site's ranking or PageRank. In particular, avoid links to web spammers or "bad neighborhoods" on the web, as your own ranking may be affected adversely by those links ...

Linking to other sites is an outgoing link. When someone links to you then it is an incoming link. When you link to a bad neighborhood your are implicitly a part of it and will suffer its fate. But if one links to you and you don't link back the worst that can happen to you is nothing at all.