After cleaning the starter and solenoid thoroughly and doing the test described above, it was soon clear that I was wrong... and somewhat right nevertheless....

As it turns out, my key switch IS NOT broken (whew!), and yet neither is my starter (per se). It was *just* the solenoid (since when directly connected, the starter cranks mightily).

When I cleaned the thing, it appeared that there was a rather huge crack in one of the nuts of the solenoid (must be due to overtightening). This crack allowed water to seep into the mechanism thus causing corrosion and disabling the sliding action of the solenoid (one thing I forgot to mention in my original post was that it was raining in this part of the world as the typhoon season has begun).

What we did was to have the solenoid replaced by a new one. Now it works perfectly! However, I was told that the old solenoid would still work, just clean it and lube it up. I didn't want to take that chance so I just changed it.

Thanks for the advice guys! It was really helpful (imagine if I continued with my key switch line of thinking...)

-Don