Hidden text can help. You will always hear that you can be banned... I have never actually known anybody that got banned due to hidden text. However, the best solution in my opinion and the way that I have got such great results with SEO is by using flash`s seo issues to your advantage. What I mean is depending on the layout of the site, you can embed the flash and purposely place it in the site to have the spiders skip it and place an h1 keyword immediately after.
Tags really don`t do much in google’s current algorithm, I use them out of habit and it lets the clients feel secure because the general public feels that is all you need to do. However, alt tags are very helpful.