Hey Paul,
When it comes to running multiple sites in multiple portals on a single install, we always recommend against it for a number of the reasons that you just mentioned. Generally the way we calculate server load is by using the following "magic equation". This is not a completely scientific number because the variables are open to change, but in our expierence, it has held solid:
O(n) = # of Application Pools * # of DNN Installs * (# of Portals per install ^ 2)
The reason that we square the number of portals in the equation is because when you add a portal in DNN, you increase teh amount of load on the database as well as teh amount of data in the database. As you can see, if you have lot of portals, it grows really big really fast.
Also, something that you'll find is that people seem to be very oppinionated on the whole portal thing. I know you can find plenty of people out there who say "Portals are the greatest thing ever", however, I work with people on a daily basis who would say "I used to say portals were the greatest thing ever". In my expierence, many times portals will work ok up until a certain point, then the system will do a crash-and-burn. I've never heard any horror stories about using multiple installs.