Forum Moderators: open
Those subtopic domains have inbound links, and the subdomain names show up in Google. In other words:
MAIN DOMAIN: widgets.com
SUBTOPIC DOMAIN: bluewidgets.com (which redirects to widgets.com/blue/index.html)
URL SHOWN IN GOOGLE FOR THE SUBTOPIC: bluewidgets.com
We've had this structure with the redirects for about 13 months now, Google hasn't shown any signs of objecting to it, and the PageRank on the subtopic domains is a healthy 6--the same as on the widgets.com home page.
I imagine that such redirects could cause a problem if they were overdone--e.g., if you had 50 subtopic domain names pointing to pages within your site. In my case, the subtopic domain names make sense because they point to "sites within a site," there aren't enough of them to constitute a spamming effort, and readers benefit from having dedicated front doors for the major subtopics.
BTW, when I set the site up this way in 2001, I didn't have any clever rationale. I hadn't yet discovered Webmaster World, so I had no way of knowing whether the use of subtopic domains under an umbrella domain was brilliant, foolish, or unimportant. (Come to think of it, I still don't have an answer to that.)