2 iPods with one computer is no problem (I have an iMod, Nano and my sons 2 Shuffles all on the same computer). 2 iTunes libraries would require you to swap directories between starting the iTunes application but would be possible. Normally you have a iTunes directory that contains a number of files plus the directories "Album artwork" and "iTunes music" (where music files are kept if you allow iTunes to manage your files). I have moved my "iTunes music" directory to another location and you can then maintain several copies of the remaining structure that you have to copy back and forth between starting the iTunes application. How this would work with songs bought thru iTunes music store I don't know since I don't do that.
1) create playlists to auto-update from (as stated before)... simplest and (imo) best way...
2) use manual management and manually update ipod(s) as needed...
creating separate libraries (or multiple music folders) is about a thousand times too much work and completely unnecessary...
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