Where are you getting this? The toolbar is known to guess PR on occassion, but as far as actual PR is concerned, you get it the same way you normally. I've never seen anything that proves directory structure actually influences SERPs.
I don't see why it would, do you? How would that help show what content is most relevant? That's an internal decision that doesn't dictate relevance of content. Links do, though, so I'd be more inclined to believe that PR is divided by links alone and that directory structure is irrelevant. And evidence I've seen seems to agree.
In terms of the link titles -- have you ever seen the title attribute help Google understand the context of a link? No offense, but how you feel about something can be very different from what actually occurs.