I have a few categories which falls under the same topic but for different years, for example Pizza 2006 and Pizza 2007. Now I'm thinking of making a universal category called "Pizza" and moving all the posts from 2006 and 2007 over. Will my site be penalized for so many broken links found from sites linking over to mine? Will my ranking drop severely? Thanks for the input!
If you just remove them, yes. Use a 301 redirect to forward the old URLs to their new locations so you don't lose your rankings or clutter your server logs with needless 404 errors.
What's the efficient way of creating such redirects? Let's say I have hundreds of pages, rather than creating page by page redirects, is there a faster way of doing it?
Not that I'm aware of - and since you're dealing with a Web server directly, doing it manually may be the best way to go.