Google PageRank is the search engine’s algorithmic measurement of the overall popularity of a website. PageRank is measured on a scale from zero to ten. New websites automatically get a 0/10 and the most popular websites can reach 10/10. This ranking is based upon the number of links that point to a website from outside sources.
Back links have lost their charm due to a numerous reasons. Though over the years PR algorithm has been revised to better the ranking process, spammers and black hat seo guys were able to workaround the roadblocks and better their rankings thereby getting more spam on the search results.
Moreover PR was not revised (perhaps not announced to the public yet) to accommodate user behaviour when web 3.0 was introduced. Social media and other marketing initiatives are gaining more popularity in attracting users to a website. Though Google is still a major contributor to website traffic, online users are relying more and more on community websites, social networking & web 3.0.
PR has lost its position as a measurement tool (at least within a small community of SEO/ webmasters) to judge the authority and relevancy of any website, since big budgets were capable of buying links that Google could not identify as to be a spam or not.
Google should be able to revamp the PR algorithm to improve the measurement capabilities and bring the PR system back to life. Perhaps take in account other means of measurements like, amount of traffic that hits the website each day, number of users landing on a page, how long they stay on the site, and how often they return back to the website.
Google Analytics can be used fairly to keep track of the above, and Google can make it mandatory for any website that needs to participate in the PR scheme to implement GA code on their site. Any site owner who is serious on SEO and traffic through Google would definitely abide by it.
Apart from this there could be other additions that can be done by the Googleplex team based on their years of research, and certainly the SEO community will be keeping their fingers crossed on PR capabilities.