If I have ZP installed in /zen directory and drag the entire contents to my local drive, do I have a 100% backup that can be dragged back if need be? (ie: all data intact)?

No, you would need to backup the database of course, too. Otherwise all data you entered or changed like descriptions, titles, tags, image sorting, album sorting, option settings etc. will be lost.

Okay, will go find instructions from Dreamhost about that. I seem to recall they implemented an easy-to-use feature.

phpmyadmin can do that, too.

Accessed the dBs using Dreamhost's phpMyAdmin and they have a simple step-by-step guide to backing up all the files to a .zip file.

I have two ways of backing up my ZP installation and wanted to share it here. Perhaps it can be of use to someone:

1. I use WordPress, and ZenPhoto uses the same database as WP. Within WP I use the backup plugin which does a cron job every evening, making a backup of my entire database including all tables and delivers it to my gmail account.
2. On my harddrive I have an exact duplicate of the albums folder on the server. When I add new images I start by uploading them to ZP. When finished I move those images to the same folders on my harddrive.

This way nothing can go wrong, I hope... but I wait for the upcoming move/copy/rename function before starting to add filenames and descriptions

I have option to install WP via my web host. First want to get all my albums running in ZP. As mentioned, I backed up via my web host but it's all manual and we know how well that goes over!