We are trying to make it so that we can have a single Web Application that uses FBA that has 1-n site collections below that. However, we would like the permissions for each site collection to be unique in that the site collection administrators do not see any logins from the other site collections in the web application. Is this possible with forms-based authentication?
Out of the box I believe the only way to do this is with multi-tenancy, and then you are restricted with AD and separating accounts via OU's.
AD is required for 2010, so why not just create a customer OU structure and utilize that instead of FBA?
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If you have access to the server you can restrict the people picker to only look up users in the sitecollection: http://technet.microsoft.com/en-us/library/cc261988(office.12).aspx
It should be possible to do a little powershell to use EnsureUser to prefill the needed account to allow the people picker to be usefull: http://msdn.microsoft.com/en-us/library/microsoft.sharepoint.spweb.ensureuser.aspx
This method is not restricting how can be added to the side, but from your question this seems fine.