Say I have an Album1 created with Tiger 5.4.

Then Tiger 5.5 comes out with some changes and bugfixes.

Then I duplicate Album1 to use as a template for a new album (Album2). I delete photos in Album2, add new photos and make a few minor changes to the text fields.

Will Album2 have all changes and bugfixes introduced in Tiger 5.5?

Instead of copying and removing all photos why don't you simply start a new project and Import the settings from the old one? If you copy the album in the file system, that might end up in a mess. For example, both albums will be generated in the same folder.

The jAlbum core actually provides "point and click" methods for doing it either way.

You can start a new project, then choose File > Import > Settings from Project, and navigate to an existing jalbum-settings.jap file (or do the import from a published album).

Or, you can open the project, click the little down-arrow next to its name, and choose Duplicate Project.

If the project has a lot of folders, images, etc., the first method is the quickest, since it doesn't have to copy a bunch of files just to get started.

But that works, too! I've done that on occasion.