I heard at Mr-Seo's podcast that making the text blend in with the background will/may get it penalized by google. But what about when you try to blend it in with the rest of the text? Some people use CSS to make h1 and links look just like plain text...does anyone know if google penalizes that yet?
Penalized no I don't believe that, you aren't hiding anything, but personally, i think looking like plain text is not as good, are you nut using it as a heading? I think it almost always looks better in a bigger font size / and or bolded
Making the h1 small shouldn't be a problem, but littering an article with a bunch of h1 tags is probably picked up as spamming or keyword stuffing.
How about using the <B> and <i> tags with a class on them that changes them to normal text ie. <b class="nobold> .nobold { font-weight: normal; } You would get the benefit of having the keywords inside of those tags seen as more important but still have them look like normal text...?
I think if you want your site to look descent you have to change the way H1 tags look (which is fine), IMHO search engines don't pay any attention to H tags anymore, if it s convieniant to place a single H1 tag on each page and a few H2 and H3's then do it but don't go out of your way it will not help with SEO, focus on the way your site looks and gaining links.