Archives vs. Categories

Awhile back, there was some commentary (which I can’t seem to find right now) on the forums about the usefulness of the wp calendar as a navigational aid. This led me to do some thinking about the kind of archiving structure I wanted to use on my own site.
I finally realized that in order to have relevant, useful archiving of posts, it must be done by category. Archiving by date/post title is next to useless. If I go to a site to read a post about underwater basket weaving, then would like to see more, scanning a list of archive links like ‘january 2002, february 2002..’ doesn’t help me at all.
I’d like to throw a couple of questions.
1. Does anybody have a good way of organizing archives according to a scheme like: Category:Title:Date, permalinked to the actual post. (I have seen both Matt’s and MtDewVirus’ implementations of something similar, but I’m unclear on how to actually implement this.)
2. Most blogs I’ve seen (including my own) display both a list of categories and a list of archives. Since the categories in WP function the same as archives (in the menu list, that is), just organized by topic rather than date, this seems rather redundant. I’m curious about why people choose to display both, and what people think about the usefulness/uselessness of archiving by date.