Zivush - 5:01 pm on Sep 6, 2012 (gmt 0)

@gouri
These were my SEO power secrets for a long time :-) but I am happy to share:

For the keywords variations that you mentioned, should those be used in the title tag or are these suggestions for the body text?

The main keyword you target, blue widget, should be on the title tag and H1, while keywords variations are for the body text.
Depending on the monthly search volume for each keyword, you may target other key-words variations putting them on H2, H3 headers.
Make it easy for the search engines to send traffic for that keywords-rich page.

(You may also decide to create another page, for any keyword with high search volume, to optimize that widget completely.)

Should the 'other colors' link be from the blue widget page?

Of course.
A reader may be interested to learn more about other colors. That's how you increase page/visit and time on site.
Search engines favor sites that bring wide spectrum of information on a certain topic (widget) and that's how authority sites are structured.