Yes the K10d is good enough to create "amazingly sharp" images, with the right lens and processing.
Yes the images seen on the "Photo of The Month" could in theory be made with the K10d.
Now both those statements equally apply to any dSLR, and indeed many cheaper compact digital cameras. The subjective quality or 'impact' of the photograph is determined by the photographer, not the equipment. And sharpness can be (and usually is) added in software. The thing to remember is that while amazing images can be achieved with the camera, the camera will not create amazing images; only you can do that.
As for which camera is better or worth paying more for, only you can make that decision. We can give advice but bear in mind that we can't be completely objective, and what is best for each of us may not be best for you. Having issued that disclaimer, I'd say the following..
Since you specifically mention an interest in night-time photography, that may mean long exposures, and therefore I would recommend going with a dSLR... a dSLR from any brand, but a dSLR as opposed to a fixed-lens compact model. Compacts may not have a "bulb" exposure option, and tend not to handle noise as well as dSLRs.
The K10d is intended as an "advanced amateur" model. Other options here include the Nikon D80. But something less expensive may be perfectly adequate. An "entry-level" dSLR like the K100d, Nikon D50, Canon 350D etc will still have more potential than a compact model, and the money saved over a more expensive model can go towards lenses - the spec of the camera body means nothing if you don't have a good lens in front. When budgeting for your camera, I would look at the price of the camera body alone and then double that, since you may find yourself spending the same on lenses and/or flash and other accessories in a fairly short space of time.
jstuedle is right to point out that "weather proofing" is misleading. The K10d is actually pretty well sealed against the elements in that you should be able to shoot in the rain but... and it's a big but... you will need to spend quite a bit (the same as the cost of the body) to buy lenses that have the same weather sealing. Having said that, it's easier to shield a lens from rain with your hand than it is to cover a whole camera, so having a weather-sealed body is still useful even without weather-sealed lenses. Either way, sealing is not the same as waterproofing. A dSLR is essentially a computer so you still need to take care of it.
As for the difference between various cameras... well you can tell the differences between camera bodies, by looking at the specs for each. You can also check reviews and user opinions before buying. It may be worth reading up on some of the key concepts and terms, for example megapixels and resolution are not the same thing. Also consider that there are differences not only between individual cameras but between systems... Pentax, Canon, Nikon, Olympus etc all have their own system - the camera is only one part; lenses are vital, and the flash system and other accessories may also be important. So see what each system has to offer, as well as seeing what each camera has to offer. Finally, bear in mind that biggest or most don't necessarily mean best for you... what is most important is that the equipment enables you to create the images you want. So before you accept my word, anyone else's or that of some reviewer... get to a shop and take a look for yourself.