Can I get iPhoto's albums to work like folders instead of labels? My wife has been trained for years with the desktop metaphor of a file living inside one (and only one) folder.  iPhoto uses the "label" paradigm that Gmail has where photos can live inside multiple albums.  But she hates that.

She wants to start with a folder full of all of her photos and then be able to segregrate them into different folders (or albums) so that when she is done, the original folder is empty.  And she can be sure a photo isn't duplicated anywhere.

Can I make iPhoto work like this? (besides copying photos and then deleting from the original album)
No - iPhoto is a database and it handles all storage of original photos as well as the edited version of the photo. Albums are pointers to photos that exist in events. You can think of events as somewhat inflexible folders since there is a one to one correspondence between photos and events, but not photos and albums.

You might have a look at PhotoMechanic which stores all photos in the filesystem and you can leverage familiarity with that idiom to not be surprised by a photo appearing in an album but be stored elsewhere.

Since iPhoto doesn't really duplicate photos when you place a photo in one album or another, it's not clear if there is a worry about duplicates or a an actual workflow issue that will systematically create duplicates of your photos.

You will have to make a call on how much time to spend learning a new program versus becoming comfortable with how iPhoto works - but most people can quickly learn to avoid actions that preclude having iPhoto duplicate photos without you being aware of the duplication.