I've outlined our goals for our site network below, built on Joomla 3 and JMS 1.3 Basic. Before I go through numerous trial and error exercises (I've already done a few ), I'd like to see if my overall understanding of the concepts are correct.

We are building semi-custom websites for clients that are all in the same industry, and want each site to appear independent of any others. We will only be creating a limited number of articles of national interest that will be shared (available) to each website, but would also like to have a single folder of images available to all sites (i.e. 'free image library').

Goals:
1) Have a Master site to manage JMS, and create limited number of shared articles.
2) Have one or more Slave sites as templates for replication.
3) Replicated sites built from slaves (each on own domain) will only share core Joomla, extensions, limited shared articles, and the 'free image library'. No users, general content, or user uploaded images will be shared.
4) Each Replicated site will have it's own Joomla template (built from same framework).
5) One "special" image folder shared to all sites ('free image library'), otherwise, each site will have it's own image folders.

Are these the correct steps to achieve our goals?

1) Create Master site, install JMS, and article sharing extension.
2) Create Fresh Slave-Site-1 (sub-directory), install needed extensions (image galleries, image sliders, video plugin, etc.), add demo (sample) content.
3) Create template to replicate Slave-Site-1.
4) New sites are Replicated from Slave-Site-1 template (new domain).
5) In Replicated site, add new user(s), replace sample content, install new template, edit modules.
6) Use Master site to manage Joomla upgrades, extension upgrades, and share selected articles.

I'm not sure how to set up a single "special" shared folder for images.

Can you provide any additional steps, or correct any misunderstandings?

Thanks!

Yes you can create semi-custom websites and use the "Article Sharing for JMS" to read "common" shared articles.
You can also decide to share the "/images" directory (that is the default).


Goal
1) OK - YES
2) OK - Yes the salve can be in a subdirectory. Remark: All the extension must be installed in the master before to be re-installed in a slave site.
3) OK - This is similar to www.mywebsite2win.com that is a kind of portal with plenty of websites with different looks and domains.
4) OK - You can effectivelly decide to make a copy of the /templates directory.
5) "Special" image folder mean that this is a Symbolic Link when this feature is "allowed" or is a physical copy with symbolic link is forbidden.
See also the tutorial video CP-05 that show how to have a specific /images and /templates directory.

6) Concerning the upgrade, read the user manual chapter 8.
There are differences depending if this is an update or an upgrade.
The update mean that only the PHP code is modified and the DB structure and content is not modified.
An upgrade mean that the DB structure can be modified and in this case, you need to re-apply the upgrade in each slave to upgrade the DB structure.
So extension may provide the "upgrade" functionalitiy and can be fixed with the "extension manage" and database fix.
See also the "maintenance" menu in JMS 1.3.x that allow detecting such DB structure modification.