In my experience more power when the wifi radio properly handles it, does improve range, but mainly with lower end clients, (eg my old windows mobile pocket PC benefits noticeably from increased output power (it's wifi radio is not very sensitive.
but there is a tradeoff with high transmit power, it reduces how close you can get to an access point before the radio gets overloaded and either offers crappy performance or does not work at all, eg, bringing my windows mobile pocket PC too close to my WNDR4700 will cause it to disconnect to any network it is connected to (including the 4700) but if I go into the options and lower the transmit power then the issue goes away.
On my laptop I can be right against the router and it will not disconnect, but performance will drop considerably.
Using a 3rd party firmware and a wndr3700, I can get the router to act as a wifi adapter and connect to wifi networks that my laptop will not even to connect to because the signals are just too weak (it will just try to connect for a while and give up, but the router can connect and maintain a usable connection (then again, most wifi clients have yet to even break 100mw, while many routers are pushing around 600mw or more.
While there is a limit to how much increasing the transmit power can improve range, it does help by essentially moving any range bottlenecks from the router, thus allowing you to get the most out of the clients wifi adapter.
I would love to see an article doing a range test of a router with a standard wifi client (what ever is built into the laptop), an another range test of a 2 of the same high mw output routers forming a wireless bridge.
