I don't study competition on KWs, I study buyer intent. High traffic "expensive" KWs have long tail KWs that you can find in search terms after running data. These long tails of the original "expensive" KWs are much cheaper and still high buyer intent.
I setup one Ad campaign for each KW source. The rule of 1 Ad group, 1 KW is correct. 5,000 -20,000 KWs to start is correct. Point all KWs to a single generic page. Take converting KWs and build specific pages for each of them. Optimize using search terms.