I would ask for reference clients that are contactable and find out what key words they targeted and then go search them yourself.

I would also have payout structured so that you hold back a % and they only get it when your site hits your desired position for the keywords / s.e. you chose. If they make a promise to get you onto page 1 (or 3) then they should be willing to accept that until their end of the deal is delivered.

And, no, getting more inbound links to a page 3 listing will not auto-jump it to page 1, its not that easy!!!

cheers,
Luke