I took a look at the ilnks of these two sites.
The one at #2 looks like he was using UAW and was turning out mostly what looks like a bunch of dating tips articles with a little blurb at the end about bug zapper devices (weird). #1 guy has mostly profile links at various forums.
However as you pointed out.. #1 spot guy is using wordpress.. and with that, he is using more sematicly correct coding. #2 guy is using tables etc. I think this all comes down to a matter of onpage factors. There are some considerable difference between these two in that department.
As for the whole hyphen thing. I will be honest, I once believed they had issue also. However, after doing some recent research, I am starting to sway more towards actually PREFERRING the hyphen domain. Why? Well... two reasons.
#1. Using hypens in your keywordcentric domain will ensure that the specified keyword you want google to pickup, is indeed picked up. I know google does its own best to read your domain, but that brings me to reason #2.
#2. CTR. Yes, if a person is searching and finds a domain that is clearly readable with their search term, guess what, they will click on it. One big jumbled mess won't be easily deciphered by many. It's in those first few seconds they glance at the results that you want them to immediately recognize your page as the one with the answer clearly viewable. Hyphens deliver on this.
I tend to believe people who have had a bumb time with hyphens did so only because they treated those sites with the same disregard they treat most of their many tried and failed sites. There is every reason to view them as better, and not as a liability.
Besides my own reasons to this... Others who have asked for expert advice also recieved an answer:
http://www.google.com/support/forum/p/Webmasters/thread?tid=2a3eee1ff6ba7cb8&hl=en
This link also references to a video with matt cuts as well as his post from a while back about the subject of _ vs -.
As far as this sampling is concerned, I say its the onpage factors making the difference.
If I am going to get a keyword domain, I would prefer a hyphen one over one without. I will see better CTR and equaly well rankings. The rest of the world and the niches I target should I use a keyword domain are not marketers, they just want the screen to come back with something that says what they want. Make it easier for them to read, it is easier for them to click. Simple.
