I think you've got it right, you'd want to setup a separate database
(check out OpenAvationMap [0] and the USGS Collaborative Prototype
[1]). Last year I was interested in using OSM for the Safe Routes to
School (SRTS) program, where the idea was to let users copy a portion
of the main OSM database around a particular school, then make edits
to see how adding/removing paths and sidewalks would impact the
walkability of a particular school. See a previous thread I started
[2] which discussed this idea of "Multiple temporary API instances".
-Josh
[0]: http://navigator.er.usgs.gov/
[1]: http://openaviationmap.org/
[2]: http://lists.openstreetmap.org/pipermail/dev/2011-August/023403.html
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