What's your recommendation for a reliable source when you're stuck for grammar or punctuation? (Looking for guidelines for paragraphing dialogue.)
You are correct, that can all be a single paragraph. It is, however, a pretty long and unwieldy paragraph, and that many sets of quotation marks looks a little strange. You could get away with breaking it up a bit, though it may not be strictly required. Something like this:
My old shoes had gone flat, but I hadn’t realized just how worn down they were until I slipped my feet into a new pair at a downtown mall in Denver. Nike Airs were true to their name. I took a few steps and laughed aloud, directing a grin to the two salespeople who had never, I was sure – they were both about seventeen years old—shod a more appreciative customer. “Feels like I’m on a trampoline!” I said. "I can’t wait to test them out on the road." I told the clerks I was walking across America for nuclear disarmament.
They seemed cautiously interested, so I continued the conversation. When I mentioned that my old shoes had walked me all the way from California, something clicked. Still, they seemed reluctant to get too friendly with an overenthusiastic customer. “Unfortunately," I lamented, looking over the old, worn pair, "my storage space is limited, so I can’t keep the old ones. Do you think I should send them to the Smithsonian?”
They both chuckled. So, I thought, they know the Smithsonian. These kids had promise. “I guess they wouldn’t be interested,” I sighed. The young man respectfully held out the trash can. They were both part of a ritual now and didn’t think it odd, or didn’t let on if they did, when I paused before placing the shoes inside. “Bye, old shoes,” I said. “Thanks for bringing me this far.”
And from "Her husband" on is a new paragraph, right?
You got it!.