Gary,
I'm not sure I follow all the questions (I'm a bit slow; only one cup of coffee, so far this AM<g>). Let me explain how I am doing it, and you can tell me if that is what you have (or have not) tried.
In a single DNN database, I have the default portal (PortalID=0), and a number of additional portals, some parent and some child portals. To add a parent portal, after creating the portal, I create a VD and set up the Host Header Name, e.g. www.foo.org (and foo.org, to be complete). And, when setting up the portal, I also told DNN to "listen" for those Host Header Names in the Portal Setup (at the top of the page during portal creation, at the bottom of the page when changing portal settings). This sounds like what you were describing in your "development" scenario.
I was able to delete my unused portals, using some SQL that I hacked together. Let me know if you are interested in that.
I hope that helps; let me know if you have any questions.
Chuck