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Jon--
First let me say that you're thinking properly. I'm not suggesting that your hypothesis is correct or that I support content scraping, but you've got your thinking cap on straight and, IME, that's at least 50-75% of success in this game.
Arbitrage works. But on the scale you're talking about (7-figures plus), we're well beyond a landing page here, a landing page there.
I personally prefer arbitrage because I do PPC management for a living so I know how to get cheap, converting traffic. However, I do wish that I had the time to build an organic niche content site for myself. If I were just getting started now, that's what I'd do -- choose something I am interested in, dominate a niche or sub-niche, and slowly build a network from there. THAT... is the beginning of a business model.
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