Thank you Richard.
As far as having a multi-site system or a couple of independent installs, I would suggest that it may be better to have separate installs. One issue with a multi-site install is that Drupal's built in update tools are not setup for it. For a single install, a module update can be done solely inside Drupal, and it will take the site off-line, update the module, and you can run the database update. This is NOT automated for a multi-site install. You will need to manually take off-line the other sites, and manually run the database update afterwords, and then manually put them back online. There are more advanced tools (like Drush) which can help with this, put it does require someone to understand a lot more about how the system works.
Yes I agree, and have found the above to be very true. On the shared server there are real issues with updating core. The whole core update process is untidy and messy whether it is on shared server, VPS, VDS or local machine. On shared server I can't have files other than provided by the ISP. I'm going to take time to re read your discussion on domains vs localhost Roger