I've been speaking to a lot of potential clients recently who seem to have been burnt by using SEO's who either aren't qualified or have deliberately been out to take their money and run. I put together a short list of questions that should be asked, though if anyone would like to recommend any more let me know and I'll add them. http://www.promarketing.org/2007/03/05/questions-to-ask-an-seo/ People looking to hire SEO's, make sure you get satisfactory answers to all of your questions, and are sure exactly what you're getting for your money before you commit!
Good points in your post, Matt! Just don't get what you wanted to say here "Make sure that any rankings that are achieved are in Google, MSN and Yahoo rankings aren’t worth much to a client and are easily achieved."