Will you pick a keyword that has only 1600 local search volume?????

Depends on the keyword and the competition, if there is no competition, why not, still an extra 1600 (If not more) people to your site.

It is an impossible question to answer. It depends on the market. Can I make money off of 1600 searches? If I can, then yeah I will target it. I'm targeting many keywords for clients that get 50 and less searches a month. But they make money off those keywords.

If it's "BUY xxx ONLINE" then why not. If it's "what is best car in 2012", then no.

As long as it is a profitable keyword or one that will resonate with my site's current visitors why not? It really does depend, but 1600 visitors can equate to extra profits in the end.

Your most likely going to rank a single page, so yea 1,600 traffic per month on a single page is pretty good. Unless your competition is a badazz at ranking their pages. Do the research.

As the other commenters here say - it depends.

However, there is a different issue you should look at. When you say "1600 local search volume" you don't specify whether you used BROAD, PHRASE or EXACT match. And there's a HUGE difference between those.

Say, your keyword is "dog training".

Broad - will match pages which contain search phrases like "best training for dog tired people". The component words of the search query don't need to go together or even in that order. Read: mostly USELESS for establishing search volume in your niche.

Phrase - will match page which contain phrases like "best online dog training today". In other words: USEFUL and much better than Broad. The reported number of monthly searches will be much smaller than broad.

Exact - will match searches which specify no more and no less than "dog training". The number of results will be even smaller than Phrase. This is the BEST way to establish the value of a search term because it shows you the worst-case scenario. You can call this type of search your "guaranteed minimum".

If a keyword has 1600 exact results, then all you need to ask yourself is if you're able to reach a significant-enough result on Google. For most long-tail keywords, if you do good SEO, you'll get to top-100 no problem. With really good SEO, you'll get to top-10.

Apply statistical estimates of what each rank "should" result in in terms of clickthroughs. E.g. #1 should give you about 40% of the clicks, #10 about 2% - and so on.

So, is 1600 good enough? If you can get to #10, that would be 32 visits if your site has a decent trust rank. If you get to #1 you'd get 640 visits, on the same assumption.

Now you can decide yourself if the keyword is "worth it"