For example, let's say I have the latest album by Scene of Action, with no songs rated. If I rank one of the songs 4 stars, it is giving the album a rating of 4 clear stars, and it is now also giving all of the rest of the songs a rating of 4 clear stars. In essence, by rating one song, it is now assigning ratings to all of the other songs on that album, which is ruining all of my playlists.
Are you doing this rating in the column labeled "Album rating" or the column labeled "Rating"? (Sounds like you are correctly doing it in the "rating" column, or otherwise you wouldn't be seeing clear stars.)
And are these clear stars showing up in the "Album rating" column or the "Rating" column? (As I understand it, clear stars only show up in the "Album rating" column.)
And are your playlists (presumably "smart playlists" with "live updating") using the "Rating" field, or the "Album rating" field? (If you use the "Rating" field, it will ignore the "Album rating" column and shouldn't be affected by clear stars showing up in the "Album rating" field.)
Sorry to belabor the point, but if you do everything in the "Rating" column, and ignore the "Album rating" column altogether, you should not be seeing any clear stars at all in the "Rating", much less affecting your smart playlists that relying solely on the "Rating" column.
But if you are saying that you are seeing these clear stars in the "Rating" column, then that's a real problem! Maybe you can show both the "Rating" column and the "Album rating" column, try setting the "Rating" column for a track or two, and maybe you can describe what you see in both the "Rating" and the "Album rating" columns.