Dan

I'll try and answer as best as I can.

#1:  there is a bonus ranking given where the domain name matches the keyphrase used.  It's pretty easy to rank #1 for bus recording systems when you own busrecordingsystems.com.   bus-recording-systems.com also will work as well, but the no-hyphen version is better if you can get it.  But it's crucial to get the keyphrase right when you purchase the domain.  You should use all the available keyword research tools out there to choose the phrase. The google adwords keyword tool is good because it shows not only the number of searches, but also the number of ad bids, which is a useful proxy for how useful the set of keywords is.  Some keyphrases convert better than others just because they are more specific - ie, 'widgets' and 'purchase widgets in bigcity' are similar phrases but one has a clearer intent, and will probably convert better.  I'm not suggesting that you use 'buybusrecordingsystems.com' but rather that you do your keyword research carefully before purchasing the domain name and building a site around it.

Your strategy as described is basically a 'minisite' strategy, and I think it's not only a valid but a highly useful one.  Whereas in the printed brochure, you might have decided to bundle all business verticals into one pamphlet to spread printing costs across a larger amount, in the web world this doesn't make as much sense because web pages (and sites) are basically free with DotNetNuke.  So I would set up, maybe, a parent corporate site, and then create a portal for each product vertical, and use a specific domain name for each target market specific portal.  Each of those can be written in the language and design style to suit the target market - those buying police recording systems are a very different target market from those buying bus recording systems because the challenges, industry, jargon and people are likely all different.  You can use your competitors for ideas, but don't forget they might be looking past the best keywords in the business due to inertia or lack of lateral thinking.  Your customers hardly ever use the same terminology that you do - that's just the nature of things.

#2 As a seller of a SEO-related modules in DNN, I'm not prepared to comment on the usefulness of other modules apart from my own.  I would recommend you pay a lot of attention to the Urls on your site because they are the first thing that a visitor and a search engine see, even before they get to your site.  The only SEO related modules I use on all sites that I build are:
- Url Master module (my own) to clean up the Urls and give you more options to optimise and redirect Urls
- Canonical Linker module (my own) to ensure that duplicate content on important pages (ie, home page) does not happen
- SEO focused menu system - one that is easily crawlable and indexable by search engines and not javascript dependent.  There are many options here.

The main thing is to get your site tidy and indexed well, and then concentrate on your linking and other SEO strategies to climb rankings.  There's no magic bullets to ranking high - just do all the right things and keep at it, and the rankings will follow.

I have just a couple more question regarding my decision to move forward with building these 3 or 4 microsites (1 parent and 2 or 3 child portals)

I'm sometimes concerned with the response time that dnn takes to request a page. (I host with PowerDnn - good reputation).  
Goal:  By having 3 or 4 child portals sort of all connected together so that the end user on the site knows no real difference
Question: Will the sites take a hit in load time?  If for instance I have a main menu with the selections "Law Enforcement" and School Bus - each taking the user to that particular child portal - will this take a larger hit in download time than if the pages were all being requested from 1 single portal.  Additonally, is it faster or even possible to use relative links in thes process to jump from portal to portal so that the user really does not know the difference? 

Maybe you can direct me to more information about doing this or from folks that have already done this.  I know there are particular modules that will let you connect (integrate at some level) with multiple portals by using the same login info 

As you recall, the main reason I wish to build 3 or 4 child portals is so that I can use keyword specific domain names for each as it is most important to us to be found by users searching for our products.  In the end however, when a user gets to the site, I would wish it to be quite like any other site, you click a menu item and go to that page. - even though it might be a child portal or sister portal as the case may be.  I'm not too concerned about URLs displaying different names, but would like to the site to navigate like any other.

Any further advice would be greatly appreciated amd what I've gotten so far has been fantastic.

Dan