Since I'm using Zenphoto at DreamHost with their easy, one-click creation of Zenphoto, I don't have access to the albums folder. I'll eventually install Zenphoto there manually so I can use ftp, but for the time being, I'm having to do without. So, I'm forced to use your option 1.
When I go to the Upload tab of Zenphoto administration, I have the Upload to: pull-down menu. There are currently two choices, / and test. I want to install an new album at the root level, so I leave /. I want to create an album (that will contain only subalbums and no photos), so I type the name Auros in the album name area. Unfortunately I don't see a choice to create an empty album. Must I upload one photo into this album, so that I can create it? If so, I will later delete the photo, as the album should only contain subalbums.
Harvey