Let's generate some conversation here.
When you start a backlinking campaign, how many keywords/phrases do you use at once?
I am optimizing my site for 3 keywords right now, one is almost complete will start on the other 2 today. I prefer to do it one at a time so just waiting for next backlink update from google to wait and see the results.
What are the determining factors that make it complete, rather, over what time span do you move on from one to another?
When starting a backlinking campaign you should never focus on a few keywords. Focus on ALL that apply including the name of your business. Search engines are getting smart. They have been smart but now they are implementing their ideas. The Google patent has just been released and it states clearly that generating links for the sole purpose of gaining SERPs can result in your website being banned. What you have to do is use common sense. If you only target a few phrases, search engine spiders will recognize the intent meaning it's obvious you were asking the webmasters how to link to you.
I focus on 40 odd KW, and as I'm link building I tend to rotate them on an ad hoc basis or in response to SERPs movements.
by rotating the key words, does that dilute effect? Would it be better to concentrate on less key words?
No, the more content you add and the more links are coming in, the wider a variety of related keywords you can rank for. There will be a core term that your rankings are built around and the more power your site gains, the broader the circle is going to be.
Start with one at a time. For a small site, build up to one (max two) per page. For a large content-driven site, one or two per major section.