I don't think you should have to worry about any priviliges with respect to files inside their home directories. Or rather, don't touch those. Also don't touch /library (it seems like these should all be root:admin, but the last time I tried that, bad things happened!
), or /system.
With respect to /applications, generally, this is also not an issue, but if you want, it is okay to set everything in there to belong to root:admin.
But basically, all you have to do is log in from an admin account, select their accounts in system preferences -> accounts, and then change them to standard users. And you should be done.
Generally, there are three aspects to file ownership and permissions:
1) The owner -- the person who created the file, and the person who typically (though not necessarily) has the highest privilege level.
2) The group -- this is a group of users who may be given privileges to the file, such as all administrators.
chown is the command that handles owners and groups.
3) Permissions -- there are three sets of permissions that specify what the owner, the group, and all others, respectively, can do to the file. These permissions address whether these individuals can read, write, delete, and/or execute the file.
chmod handles permissions for the groups defined by chown as well as for all others. You can find tutorials about this -- there are several ways to set the privilege level for owner, group, and others.
But generally, since any "installed" files that live outside the users' home directories are installed with admin privileges (e.g. to the apps folder), they are installed with the Admin group as well. Because of this, it usually doesn't matter who "owns" the file, and you really get no benefit from going through and changing ownerships.
The major exception is when regular users need read/write access outside their home directory. This comes up in cases like that shared iPhoto library you were asking about. Then you have to plan it out carefully. Otherwise it generally doesn't matter.
