I spend Christmas to New Years in Key West and my wife, sister-in-law and I like to ride from where we stay (which is right off Duval St. down in the action) to Geiger Key Marina which has a nice outdoor bar setup. A lot of the ride is on the shoulder of US1, the rest being bike-lanes and the bike trail/sidewalk that goes along the north side of Key West. We do this on cruiser bikes (this year I think I'll get a hybrid) and it isn't too bad. We do it at around lunch time/early afternooon.
Obviously there's always a danger riding on the road, but we haven't had any problems. Drunks/bad drivers are a concern. I find the sidewalk part of the ride more distasteful than the shoulder on US1 because of all the curb cuts. The "trail" on the south side of the Key West goes along the beach where there are no curb cuts.
I'm not sure how things get north of Geiger Key which is Saddlebunch Keys and then Suagrloaf Key. I am interested in that because the next bar/grill destination is in Sugarloaf Key. If anyone has done this, please let me know if I should expect anything worse than to the south.
If you want a truly questionable bike route, try the bridge from Nags Head to Manteo in the Outer Banks. My wife and I did this one and couldn't believe that they're got the nerve to call it a bike route (3' max. between the bridge's jersey barrier and traffic doing 50+mph)