I can report that, in nearly five years of ownership (and as many Chicago winters), I have only wanted for AWD on two days. Granted, I do have four dedicated winter tires installed during the colder months.
There are plenty of suitable applications for AWD. If I still lived in Colorado, I would probably have it (in addition to the aforementioned winter tires). But, in Chicago, I really can't justify the added expense.
This should be "SOME women think they need to be 'sitting up high' so they can see....in a big arse huge SUV type vehicle." otherwise you're wrong. I don't like SUVs or large vehicles, the smaller the car the better. I want to be cocooned in the car and not run as high of a risk of rolling. As for the OP's questions I feel the Prius is very safe. The material might be thin, sure, but that is part of what gives it the better MPG. It does have great engineering on its side to give it great safety features. Bigger <> better. We usually get about one bad ice/snow event per season in my area and in my 14 years of driving I have only ever had to use a 4wd vehicle once and that was because I was going in my driveway from 2nd gear and my driveway is uphill at the bottom. Keeping the SUV for bad days might be worth it then depending on how bad it gets out there. Of course people on here talk about winter tires and chains, that might be an alternative. One final note about the safety aspect, I wanted a safe car for my son (about to be 17 months) and the Prius has side curtain airbags which are great to have when you have an outboard car seat. To transport my son around I would have opted for a tank if it gave me the gas mileage of the Prius.
My wife LOVED her AWD Pacifica despite it being fairly beat up, and having over 110,000 miles. We talked about options for new cars. I mentioned the Prius, but she was not too eager to try one out. We kicked it around for several months then one saturday we had time to run by the local dealer. We drove a 5 first and she liked the car ok, but pointed out a surpisingly rough, and noisy ride. We then drove a 3, and she was sold. Getting rid of the bigger alloy wheels did make a huge difference, and ditching some of the other unimportant upgrades made the price too good to pass up. After a couple tanks of gas she has completely bonded with the car and LOVES it.