I think the PR of the page that links to you is how Google measures PR.
Suppose in your example your links were placed on the homepage of the site, you would be getting linked from a PR5 instead of a PR1.
Sometimes links pages with a long list of links lost PR value…But I am not 100% on this. The general idea is to keep the PR of links pages high by keeping the links/content consistent and putting less than 25-30 links on the page itself.
A great resource on the whole PR debate and how it can affect your site can be found at http://www.webmasterworld.com . From the main page navigate to Google News and you will find umpteen posts on the subject.
Frankly, I think PR is a little over-rated at the moment. I like to use the Alexa Tool Bar instead which measures site traffic as opposed to some subjective measure of site importance.
I have seen sites that rank about 200,000 in traffic for Alexa with PR’s of 5, yet Referback.com, a major casino affiliate sponsor, with traffic rank of 3,500 gets a PR of 1. Go Figure….
Alexa isn’t perfect either, but if you measure your progress in chunks of, say 50,000’s, you can gain a better idea of where your site stands out there on the net.