Keyword dilution can really harm search engine rankings, because having too many of the same keyword can be considered as exaggerated spider food and the search engines this will be seen as spam and too high keyword density will bring down the page rankings.
THE BEST WAY TO AVOID KEYWORD DILUTION
The best way to optimize a site is to have the same amount of pages and the same amount of keywords. Use a professional keyword research tool. The Adwords keyword tool of Google is a great tool to find out the best keywords for a site. If a web master owns a site with twenty pages than the best is to include twenty keywords or twenty keyword phrases. Optimize the site for the keyword phrase 'coffee cup' if you sell coffee cups on line. If a online entrepreneur sells coffee cups with teddy bear print on it. Then dedicate a whole individual page for this product and if a web master would optimize a site for 'coffee cups with teddy bear print' this will have more chances to get found than the web masters who optimize there site only for the word 'coffee cup'.
If you dilute your web site with emphasized phrases like 'check out the best printed coffee cups of the whole globe', blue coffee cups, gray coffee cups. This type of phrases should not be on the home page. It is better to save this for the more specific product pages. Try to avoid adding color to the home page, this is a great example of keyword dilution. Just optimize your site for more than one keyword. Keyword dilution is not something complex to understand.