Googling, from a cost of living standpoint Port Townsend is about 115% of national average.
Louisville Co is 150%.
Seattle where I live is 170%.
It's definitely affordable unless your want a house on the bluff above the downtown with a view.
Woodworking is mostly oriented to wooden boat building. Turning is a big part of that. Edensaw Woods nearby has turning woods.
The only drawback I can think of it's a small town and 2+ hour drive and ferry ride to Seattle and airports, etc.
Tourism is big. Last time I was there was mid week in the fall with no special events going on and no on-street parking spaces available in the main part of town.
Their annual boat festival is mid-September. Might be worth a trip if you can do it on short notice.