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Yes in my opinion, but it's not ideal.
Before Google, AltaVista liked to have the words, rather than phrases, in the title. The title above would have been fine.
Because of the proximity bonus [webmasterworld.com] in Google (equivalent to a default "NEAR" operator in the pre-Google AltaVista days), you might want to have "Widgets in Widgetville" and "Widget in Widgetville" as phrases for best effect.
This might lead you to pick different pages for the two phrases (as I have often done), but over the last few months Google have seemed to place far greater importance in how many links from other domains use your target words (rather than how much PageRank).
If most of the links from other domains are to our homepage, then we seem to be encouraged to use something like "Widget in Widgetville / Widgets in Widgetville" as our title. There comes a point where it becomes inelegant, so it's often a comprimise.
However, it may not be the best idea to make your title say "Widget / Widgets for Sale". While this might potentially cause Google to give it a higher rank for more queries, when users are presented with results, the title is the main thing they see.
While title is important, other elements are also important (headings, bold, etc.). Why not try to mix up plurals and singulars to approimate the balance of incoming query volume?
Even though index.html has the greatest PR, Does google favour the index.html page over the rest of the subpages/subcategory pages?
Google does not favour index.html because it likes it but bcoz it generally has maximum no. of inbound links. If you can direct good no. of inbound links (with suitable anchor text) to your domain.com/keyword.html or domain.com/keyword/keyword.html? page then no reason why it should not rank higher. HTH :)
I think this question should have been asked in a separate thread.