A further update on the permission error issue.
First, I agree with egon1984's comment on the errors, they may well have been different types of errors. Clearly the permission is not the ownership issue. I am guessing that some of my files have been edited with Photoshop and this is leaving some residual flag. Furthermore, I think strategies I have successfully used are similar to the ftp transfer method and succeed in circumventing the problem in a similar way.
Since I had upgraded to iPhoto 11, I did succeed in restoring my earlier iPhoto 9 library. I did this with a combination of TimeMachine, ftp the files in a folder with an error (this asked for password but brings over all of the files, though in a tedious manner), and then with File Synchronization to bring over missing files (because the ftp method might meet a permission error in the middle of a folder). After all of this, I did succeed in restoring my iPhoto 9 library. However, I discovered my missing places were also missing in my most recent backup as well. I decided to abandon iPhoto 9 and return to my iPhoto 11 library.
The ftp method let me look at the permissions of the individual files that stopped the ftp transfer process from the folder level. I could not discern why they should stop transfer. I believe the reason was the same as was stopping the TimeMachine transfer. When I tried the File Synchronization app, I was expecting that it would locate missing files. I discovered that it succeeded in transferring the files without my entering a password. Ah, interesting!
For my final restore of my iPhoto 11 library, I used a different program that uses the TimeMachine backup, namely Back in Time. This restored my iPhoto library almost as I had expected from TimeMachine. Opening this restored iPhoto library gave an error message saying that this library could not be opened. That was because it pointed to my TimeMachine file. I used iPhoto Library Manager to delete the TimeMachine backups listed in iPhoto and restarted iPhoto pointing to the default library. This worked.
Conclusions: I believe TimeMachine has a bug that prevents it from restoring iPhoto libraries as we should expect from a backup program. That is the source of the permission errors. It appears as though there are several work arounds to this basic error which include ftp transfer, archive and unarchive, other transfers programs, File Synchronization, Back-in-Time, and perhaps others. I remain convinced that the most suited solution is to report to Apple this bug (http://www.apple.com/feedback/iphoto.html) and hope they resolve this problem.