How are dynamic priorities of threads computed in Linux 2.6.x?

Quoting from this

The Linux 2.6.8.1 scheduler rewards I/O-bound tasks and punishes CPU-bound tasks by adding or subtracting from a task’s static priority. The adjusted priority is called a task’s dynamic priority, and is accessible via the task’s prio variable (e.g. p->prio where p is a task). If a task is interactive (the scheduler’s term for I/O bound), its priority is boosted. If it is a CPU hog, it will get a penalty. In the Linux 2.6.8.1 scheduler, the maximum priority bonus is 5 and the maximum priority penalty is 5. Since the scheduler uses bonuses and penalties, adjustments to a task’s static priority are respected. A mild CPU hog with a nice value of -2 might have a dynamic priority of 0, the same as a task that is neither a CPU nor an I/O hog.

I feel this is a fair explanation. The priority is computed based on whether it is a CPU bound thread or an I/O bound one. And regarding what you mentioned in the question, that gain priority by using less of CPU is rather gain priority by being interactive(I/O bound). I hope this excerpt answers your query...