Thanks for the detailed response intel, cleared up alot of stuff for me.
I'll try to find the mod to test the speed and I'll get back to you with the results.
You also mentioned how the links turned out for me, so here's one of my examples:
http://www.sitenotyetactive.com/hobbies-and-fun/arts-and-crafts/crochet_p2205.html?cat=51&page=1
The above is fine, but ideally it'll be best if they can turn out like this:
http://www.sitenotyetactive.com/hobbies-and-fun/arts-and-crafts/crochet.html
But I do have to say that all my first level and second level category links are perfect the way they are, for example:
http://www.sitenotyetactive.com/hobbies-and-fun/
http://www.sitenotyetactive.com/hobbies-and-fun/arts-and-crafts/
And those were generated with the category names: "Hobbies & Fun" and "Arts & Crafts"
Just to throw out ideas, what do people think about eliminating the "and" altogether? and just have like "/hobbies-fun" and "/arts-crafts" --personally I think the "and" makes it easier for the user to read, but on the flip side, the links would be shorter, and that's a plus too.