I have panther with the latest update to ilife 05 and I copied my iphoto library directory to an external HD (format of the external drive was mac os journaled). When i copied it back and opened iphoto 05 on my mac again running tiger now, It was unable to differentiate between albums inside a folder, so now I have folders with every picture that was in an album inside that folder.
I have to re-create all of my albums again.
My advice: Before you copy your iphoto library out, move all albums out of their folders and then re-create the folders after you re-import the library.
Anyone have another solution?