I'm planning on doing something along these lines with WordSmith:
I don't think it should be too hard, once they iron the bugs out of the category permalinks
Basically, all you need to do is to set the template to only show one post per page.
The only thing I need to figure out how to do is to create a menu that will automatically show all the posts for the current (sub) category. The way I would like it to work is that when you click on a category, instead of showing you all the items in that category in the body of the page, it drops down a menu of the titles of all the posts in that category, or perhaps brings you to a "default" post for that category (i.e. "index").
Then there is one more step, which would be to integrate a blog into the site!!! I figure I'll set up a second WordPress blog at a sub-domain of my site, say blog.mysite.com and then use some hack to display the latest posts from that blog on the main page of my "static" wordpress site.
Any suggestions would be appreciated!!!