That's pretty much how I have this one worked out. Each user has edit permissions only for their page (which automatically gives them sub-page permissions). They all have access to a shared Images directory to upload their images. I've gone through and disabled all but two of the scheduled tasks and changed the remaining two to run seldomly. It's still throwing up really odd caching problems, as well as page order issues.
For instance, when some users create pages, they show up at the very top of the page list under Admin->Pages. According to that list, they have no hierarchy, although if I go to their page settings, the correct parent page shows. When I updated it there and then was showing someone how to add a links module to their page, the pages list there still had the old list of pages that I had fixed about 15 minutes previously. When I cleared the cache (which, by the way, was set to No Caching), it finally pulled the new list.
It's a quad-core Xeon running Windows 2003 Adv 64-bit wtih 8gb of ram. there's no bandwidth throttling, and i had it set to limit the connections to 1024. there are no custom modules--in fact, i uninstalled almost every module except the basic text/html, links, media, etc. that they might need to get their sites up. i uninstalled both alternative auth systems as well. I'm using the iFinity url rewriter, but i disabled it last week for a few days and had no change in the performance so i turned it back on.
i still can't figure out why pages created under people's names come up in completely random places, and why some seem to jump around. for instance, if teacher X creates a page under his site, and teacher W deletes a page under her site, sometimes teacher X's page jumps up into teacher W's listing on the Admin->Pages page, but still show the correct parent on the page settings. When this happens, though, the page doesn't come up anywhere on the menu.
I'll just keep moving their pages back into place and keep trying more suggestions. Thanks to everyone who has replied--it's great to know that the community is behind the project :)
-Andrew