As to the nature of traffic along Lake Crescent it certainly is no worse, and in my mind, a whole lot better, than riding through Sea Ranch in CA where there has been no upgrade on CA 1 since Sea Ranch was built.
That's interesting. I rode through Sea Ranch on my tour 10 years ago and don't remember anything particularly bad about it. I did do it during a weekday morning in September, though. However, I hit Lake Crescent during the worst possible time possible--a Friday night in July right after they freshly chipsealed the road (and there were no warning signs for it!) The gravel was still in thick drifts on the side of the road, so we basically had to "take the lane". Not fun.
Since we've traveled to Port Townsend several times in the last three years, we've driven the stretch along Hood Canal - other than the proximity of campgrounds I wouldn't take it over the peninsula route - way more traffic (and fast) and so-so shoulders. Certainly scenic enough.
Yeah, the inside route on 101 is a bit busier than I wanted, but yeah, scenic. Going the long way around is quieter.
Count me in the camp that favors riding the Peninsula and taking in the side trips, if you can. The part that does rub me the wrong way is the lack of HB camping sites at both Kalaloch and Hoh (not to mention a lack of showers). Sure would like to see ACA put some pressure on the Park Service on this. Riding 18 miles one way from 101 to the Hoh to not find a camping spot is not acceptable.
Agreed on the hiker/biker sites! When I did my tour it was difficult to find camping at the campgrounds. A couple nights the ranger basically plopped us on the service road since the regular campsites were full. I'm glad they were accommodating, but I'd rather camp in a real spot if I can.