The other half of your keyword research has to do with assessing keyword difficulty, this itself is a very complicated concept.
Another method is to simply look at the top ranking page and check their PageRank using the Google toolbar. This is the method I recommend for novices who cannot intuitive judge optimization quality when visiting a site. PageRank is not a perfect system, the toolbar you use to check it is not always accurate and it still does not indicate perfectly how much work the site is putting into its optimization. However, it will tell you roughly the total weight of the income links of the #1 site, and using that you can estimate how difficult your link building activities will be if you want to beat that site.
Realistically though once you become more acclimated to search engine optimization and what it all entails you'll want to check the top 5 or so sites and look at things like how professional they look, their incoming links, their PageRank, their use of on-page optimizations, and the age of their sites. You should also look out for technical hurdles they may not have addressed. Many larger sites or small business sites, even those by very large corporations, are often built without any regard to SEO and so while it may be intimidating to compete with them the fact is that often they have technical SEO roadblocks that are really hurting them and make them easier competition for you. These technical hurdles usually have to do with redirects, internal navigation, and session management.
Another aspect to consider in your keyword research is how profitable having a site based around the various keywords can be. The fact is some keywords or site topics can pay vastly more than others. This concept was discussed in a previous article on finding high paying keywords.