Ha Ha, that picture is only 1/2 mile from my home. Yes, here in Minne-snowta we have many roads with these nice wide shoulders. A fringe benefit of the extra space needed for snowplows to move the mounds of snow for 5 months of the year. Scot, you should show them a pic of that same stretch of road right now, where there's a 4 foot high snowbank lining the road.
This question of passing on the right is simple. There is no law against doing it, so the only decision to be made is whether it is safe for the cyclist to do so. That's a decision for the cyclist only, as of course the people in cars have virtually no safety issue to be concerned with, and they may only be "incovenienced" by the cyclist on the right in a minor way.
Scot, you should show a pic of 86th st. It's a 2-lane each way with no median or shoulder. Ironically, it's also a pot hole ridden road that's actually marked with signs as a "bike route". I used to commute on this every day, and when it was busy I would scoot up along on the right past the line of cars to get all the way up to the intersection. But, I would often wait in the crosswalk at the intersection for the line of cars to pass me or for a gap to open before getting going again. Again, I did this FOR MY OWN SAFETY.