Hey Drea,
Have you considered starting out just as a hafla the first year, to see how it goes? A hafla can be a few hours to all day, and can include all the things you suggested, but is a smaller commitment (especially financially). Then you can get a taste of all the cat herding, while keeping expectations and responsibilities a little lower, and then if it's a hit, grow it a little each year! Minimize your risk while putting out feelers for how it might succeed in your area.

The word festival to me just conjures up such a big to-do, I personally balk at it as a marketing term, partly because there are SO MANY festivals these days (and many more that have gone under in recent years due to oversaturation and the economy). Especially in already pretty packed-to-the-rafters Northern California, it's a risky proposition.

As for your questions on merch tables: at haflas, I usually have paid around $35-$40 per space. At festivals, I have paid anywhere from $120-$500 a space. That gap might give you an idea of the expectations from vendors and patrons of a difference between the scale of a hafla versus a festival.