Keyword density in Url

i have site.. that i will try to describe without giving out the exact names.. i'll try to be as clear as i can about what i'm after..

i'm selling widgets.. just say.. at widgetshop.com half the main search keyword is already in the root domain as show. now the catagories are very limited in the ecommerce site.. they are divided by say by three material types and then by colors.. so
widgetshop.com/materialdescription_widgets/blue_materialdscription_widget.html would look almost exactly what i was thinking of using using widget three times in the url seems very dense to me.. this makes intuitive sense to me.. so if i was searching google for materialdescription widget.. like say for example wood pencils.. i would have alot of pages with urls that have the catagorie wood pencils in them.. with the world pencil three times on all the product pages.. is this dense... where is the limit.. this is a very niche site with very limited competition .. i don't wanna get penalized.. and i don't wanna look like i'm over describing in the url in such a way that it looks spammy.. any further questions let me know.. need help..

As per my understanding, Now a days Google don't like over optimized website.

You don't need middle directory, You can create url like widgetshop.com/blue_maerialdescriptionon_widget.html and i'm sure this should be best as per Google guideline.

so.. only use categories in urls .. when displaying catagory pages..
so for a product results page with all the products of that particular material you would have.. widgets.com/materialsdescription_widgets .. then drive down into a product it would be better to just have.. widgets.com/materialsdescription_bluewidget
is that what your saying?

In the site building process you have to select a main keyword and 4-5 keywords for every page. This main keyword has to appear in the page URL. It is necessary and sufficient.

I think Google might consider your site as a keyword stuffing if you put some keyword in your URL. (It's my own opinion)

Keyword Density is the percentage of occurrence of your keywords to the text in the rest of your webpage. It is important for your main keywords to have the correct keyword density to rank well in Search Engines. This tool will crawl the given URL, extract text as a search engine would, remove common stop words and Analyze the density of the keywords.

That you well said and it is really true that google don't like over optimized website. We must should be careful on this point to stay on well ranked on search engine.

You should not Spam with Key phrases , But having Keyword Rich Domain is up to three time Repetition is not spam if having great content and Quality of website as Per following Key phrases stuff rules . After EMD their is Signs towards not to use Keyword Rich Domain . For more Quality you Should Go with A way Suggested Above by senior members .

If it's relevant I don't think you will be penalized for spamming. However as a practice long url's should be avoided. I see no reason why you should add widget with every phrase but if you have already done it then it's not wise to try to change it now.
I'll be more concerned about same content appearing under different url's. Then you might incur a duplicate content penalty. You might want to explore the rel=canonical tag.

I heard about it too but I don't think that it is true .

I do not think it is good, but rather negative effects on seo. Such as keywords over-optimisation..

A lot of people will have opinions, but whether anyone can answer you with conviction is extremely doubtful, I think.

In my opinion I'd prefer the first, without the further "info" bit in the domain-name, because I trust what I hear from Google, Matt Cutts, and several authoritative textbooks about hyphens not usually being at all relevant toSEO.