Maybe you should get first familiar with the tool you are using before making these grandious plans of messing with the database and creating your "dynamic menus" (whatever that is).
Posts and Pages are two different things, but you taalk about them as if they were interchangeable.
Clicking on a category name it will display only posts from that category. Whether all or just a X number with 'paged' view - it's up to you; you can use a plugin to set different # of posts in different views.
What is displayed on your category archive view is determined by your Category_Templates.
So, don't tink you know the "how-to". Just describe WHAT do you want to achieve, in plain English, no technical mambo-jambo, and some experinced helpers will tell you HOW to do it.