It used to be the case that once you crossed the 700 mark, the GMAT would no longer be a concern and you would be in a good competitive standing among other students. Over the years, that number has grown a bit and averages at the top 5 are creeping toward 720.
Your assumptions are correct. There is actually a very big difference between a 760 and a 700. A 700 won't keep you out of a school, but it's not going to be the part of your profile that gets you in either. Although a 760 alone isn't going to get you into business school, it might be enough to distinguish your from a similar applicant who scored 700.
The bottom line: score as high as you can, but don't be discouraged if other people have a higher score than you.
Thanks for the answer Aver. If I give you the two following applicants and lets just assume they are more similar in almost every aspect except for the listed differences, who would be a stronger candidate for a M7 school?
GPA: 3.5 (not a very distinguished undergrad)
W/E: nothing glorious ... lets just say he sold insurance? Or a credit analyst at a local community bank
Essay: fantastic, told a great story about why he wanted a MBA (mainly because he wants a change)
GPA: 3.4 (Ivy)
W/E: Investment Banking analyst at Morgan Stanely Chicago (got the job cause he went to an Ivy)
Essay: decent story about how he wants to further his IBD career etc.