@TheCraig - I don't have an answer for you, but I have a few thoughts I wanted to throw out there.
My concern about the AJAX links is it might be considered hiding content/deceptive behavior to the Google bot (but again, I don't know what the specific implementation is).
Idea 1 of 2: Is there any way you can use category pages?
So I was recently reading a well-recommended book, "SEO Secrets" by Danny Dover, and I came upon this interesting analogy describing the site architecture. I'll copy from another site's description of his analogy:
"One of my favorite analogies for a good site architecture I first heard from former Mozzer Danny Dover. Think of your website like an ant hill. The opening of the ant hill is your homepage. Each link is like a tunnel connecting various web page chambers. You want each of the chambers to be easily accessed from the top of the ant hill. That means you want to organize your website in a way that allows easy navigation from your home page all the way down to the deepest chamber of your site." -- Gyi Tsakalakis on Attorney Sync, link
Could you simplify your website into base categories that would make business sense?
I understand the predicament you're in. By conforming to SEO (by removing links from the dropdowns), you may be killing usability for the user and thus conversions.
Idea 2 of 2: If the question is important enough, why not bring on Danny Dover as a consultant directly to answer the question?
He seemed like site architecture was a big deal to him. Take a look at the first few chapters of his book: "The Importance of Good Site Architecture" (Chapter 2). He seemed to emphasize the topic through his book.
Then this is my idea: if it makes sense to do so (budget-wise), see if you can take him on for a few hours of his consulting time in order for you to explain your problem, and get a response. You have a very specific question (thus relatively straightforward to pick up and answer), and it might be fitting for a brief conversation.
The AJAX'ing is speculation (b/c no one actually knows how Google's inner workings). Why not get speculation and judgment from someone who really knows his stuff, rather than speculating with a bunch of strangers online?
It's a business expense to get the best judgment on what sounds like an important restructure!