When optimizing your site's txt content, mys suggestion is to write for your audience. Write txt that accurately describes the overall theme and tone of the page. Of course you want to implement certain long tail  & short tail key phrases, however this MUST be done in a way that reads for the audience and not for Search Engines.

So to answer your question a bit more directly:

• You want to write enough content that will accurately explain or convey your overall on page message. Typically more than 1-2 paragraphs. How do you know when to stop? When the txt begins to become repetitive or less relevant.  Quit while you are ahead
• In regards to long & short tail key phrases, I would keep it to about 20-30% of the overall content. I would split up as follows; Include in the beginning somewhere in the middle and at the end. (I know that sounds simple) The trick is not over doing it and having it read for your audience ! Ask yourself would I read this?

Hope That Helps