I did a very interesting experiment last month. I purchased a link spot at a large private network of sites, which has millions of pages and sites indexed.
It was for a relatively unestablished site. The site was actually pr2 and had maybe 50-100 backlinks in yahoo. It's also a few years old, but I've rebuilt it completely several months ago.
Before this experiment it was ranking somewhere between #9-12 spots in Google for the main keyword and somewhere on 2nd or 3rd pages for other keys. The site wasn't making any serious money and I didn't have much expectations from this, so this was done purely in scientific purposes to see what effect a million links can have on serps
First few days I watched in yahoo backlinks how my link counts grew, first it was around 100, then 500, 1k, 5k, 10k.. 50k.. 100k
Now, a little less than two weeks into the experiment there are about 200K backlinks shown in yahoo for the site, all going to the frontpage. These are only backlinks shown and only in the yahoo tool. So take into account that yahoo doesn't list all the backlinks they find in their tool and that Google might find more backlinks, so this could easily go up to a few million links for Google.
And guess what happened to the serps?
They are all gone! The main keyword where my site used to be #9 in Google it's now #190 and for the other one #163.
The site is not banned or deindexed and ranks #1 for the domain name, but all the serps for keywords are gone and Google is not sending any traffic now.
I guess that means adding tons of backlinks very fast can cause you to lose serps and now I have some definitive proof for it, as nothing really says SEO like doing your own experiments and analyzing the results.
So.. adding 200K links in 2 weeks will kill your serps, on the other hand it should work on your competitors too.