The problem is I have a lot of Widgets and this could get messy: ABC Green Widgets, Small XYZ Widgets, many combinations. I can see my Widget page teetering on being a link farm if I start throwing in all of these combos.

salivating  This isn't a problem.  It's an opportunity.

It would not bother me to have a huge page of links to internal content on my site.  It would really impress any person who arrives.  I would make this page look great with images and icons, color blocks and headings. 

If you are not comfortable with a single huge page then break it into multiple category pages.  These would compete in the SERPs for secondary keywords.

Go for it!  Good luck!

"how to value organic traffic"

That's a different question than "how much can I get for a website?".

But getting to your real question of "how to value organic traffic".... that depends upon what you can do with the traffic (display adsense, sell merchandise, generate leads).

Although you can put a generalized number on that the bottom line for the buyer of your website depends upon how effective your website is at converting customers for a specific service provider.  The generic website that you have for sale has zero value for the service provider.

You are selling a sign post without a sign, not a money-making machine.

I think that you have a lot more money making potential selling SEO services than selling pre-ranked websites.

You get what you can convince someone its worth.

I agree.

I believe that most people who own wedding shops will be much more inclined to invest in having SEO done on their existing website or on a domain that matches the name of their business than they are to buy a website from a Joe Schmoe who is trying to sell them YourPodunkWedding.com.

If they already have a website they probably have a relationship with a local person or company who built the site for them.  They will call that person who they know and trust and say... some Joe Schmoe is trying to sell me YourPodunkWedding.com... and he will say.. "They are probably going to sell you the site and then pull the links as soon as they have your money."

Why would they want to buy a website from you?  They probably already have a site, have spent a lot of money on it and want to continue using it.  Your site would not feature their store or their products or their staff or their salesmanship.  The site would need to be built over again.  A waste of your time or their money.

I think that you will get a better return selling SEO services to the biz owner who is currently in position #7 who would like to be in position #1.

If the site received 500 visitors per month and 5% of those became customers multiplied by the average profit per customer - that would give a monthly value of the website.

I think that your 5% is really high.  In a small town there might only be a few places to buy these products and the shoppers already know about them.  Where there is a larger market the buying decision is going to be based more on the products for sale and less on the rankings of a website.

Also, I think that your valuation is high.... why should they pay you the entire profit on the monthly sales?  They are in business to make money for themselves - not to give all of their profits to you.