The exact match domain 'trick' died in early 2011 updates. Prior to that I had done exactly what the article suggested - Exact Match Domain, 3-5 page site with optimized keywords, and boom the site would be on page 1 with no backlinks in 2-5 weeks.
Today this does not work if there is any competition at all for a word. (I've still seen it work for long tail terms with no competition).
Long story short - you need good content to rank well :-)
On your last point: If true, that would mean a temporary hit but over time it would provide a permanent benefit. Great tradeoff.
A user searching for exactly what your website is offering, using the words that make up your website url, should at the very least have a strong opportunity to arrive at your website. If Google did anything else it would offer an opportunity for Bing et al.
On the other hand, I think I disagree with the buying a new domain to target an exact match. That will just give signal to Google that it's a new domain and it was unnaturally optimized.