TallyMan:

Chin, I do have substantial holdings in Vanguard Inflation-Protected Secs (VIPSX) in my ROTH as a diversifier in our "Growth" bucket. If I go the bond mutual fund route for ongoing income, I assume that I could/should go a bit longer in avg duration (perhaps 5-10 yrs) than I would otherwise because interest-rate-risk to NAV value would not be as big a factor and I'd likely get a higher yield.

The risk would be the same, because a diversified bond fund behaves just like a ladder.  A short-term Treasury bond fund could hold equal amounts in bonds with maturity of 1-5 years, and replace every maturing one-year bond with a five-year bond; that is essentially what you would do in a five-year Treasury ladder. 

The only difference between holding an individual bond and holding a bond fund in this respect is that the bond fund tells you what your bonds are worth daily.  If you hold individual bonds, their value decreases, and you could look up this value in the paper, but you aren't planning to receive that value.  If interest rates rise, the NAV of your bond fund will fall, but the yield will rise, so your income payment won't change.  You will still wind up with just as much if you hold the bond fund for the average duration of the bonds.

But note that the duration of a bond is less than its maturity, because some of its value is in interest payments.  For example, if you have a 12-year Treasury ladder, the average maturity of your bonds is 6.5 years, so you have the same interest-rate risk as Intermediate-Term Treasury, with a 6.4-year average maturity and a 5.1-year average duration.

Plus, for ongoing income, I'd still have some money markets and CDs to keep pace with interest rate rises.

A CD is equivalent to a Treasury bond of equal duration; a five-year CD earning 5% will give you a 5% yield over those five years, and can't be cashed in before those five years without a significant cost.  A money-market fund or short-term CD is cash.