Create a view in D7 that displays and links the taxanomy term and displays and links nodes associated with the term
Views tree

This module provides a tree-based style plugin for Views. It is
equivalent to the tree-based style template from Views 1.
It is based off of the list style. Although it generates a nested
view, there is still only a single query run for the view making it
quite performant.
Compatibility
This module has been tested and used with the following
relationship-oriented modules:

Taxonomy (in core) - parent/child relationships References - node and
user references Relation
references between any entities (D7 only)
Entity reference - references between any entities (D7 only)
Organic Groups (D7 only)

Example: