Dummy articles

Its not necessarily true that all 1st rank holders have done dummy articleship. Many have gone to office everyday and still studied and attended tutions. But yes generally dummy articles do well because they get more time to study and attend all the classes etc etc.
Regarding the fact that whether dummy articleship affects your career i think it depends on a lot of factors. If ur a rankholder i dont think it affects that much. I myself have seen a person who got a job with a fat pay check after full dummy articleship just because he was a rankholder. But again you cant be very sure because sometimes it does affect your career. Basically doing dummy articleship is a huge risk. You risk getting caught by ICAI and having your full training de recognized, you risk not getting a very good job later on maybe.
There is no hard and fast rule that if u do dummy you will be a rankholder in finals and if u do articleship you will fail. So it all depends on you and what choice you make. Knowing work is important no doubt. But clearing CA Finals (with good marks) is also important. Basically clearing CA final assures you of a good job. But whether you will grow or get promotions and all in that job depends whether you know your work. Thats where articleship comes handy. :) So u see both are important.
I hope this helps.