It will work with the same caveats as always:
1. Only one user can access the Library at a time. iPhoto is not a server application, it's not designed for a professional setting.
2. Wireless connections are dangerous: A strong warning: If you're trying to edit the Library (that is, make albums, move photos around, keyword, make books or slideshows etc.) or edit individual photos in it via Wireless be very careful. Dropouts are a common fact of wireless networking, and should one occur while the app is writing to the database then your Library will be damaged. Simply, I would not do this with my Libraries.
Thanks Terence -- we're on a wired connection so we're safe from #2, but I'm concerned about #1 being a problem for us. We already have issues about accessing items one at a time when it comes to documents, presentations, etc.
Is there a thrid-party application out there that would allow us to acomplish this?
Apple -- could this be something you address in future iPhoto updates?
Give Media Pro 1 a look. You can keep the source files on a server and each user can have their own catalog file of those photos that will give them their own "library" of those photos.
However, when editing a photo it will edit the source photo and that will affect all users so be sure to have backups. You probably can set the source files to be read only if you don't want every one to be editing them. Or edit and always to a Save As to the individuals Mac. You can add IPTC metadata annotations to the source files,
rename files, and catagorize the photos with labels, catalog sets and keywords.
The catalog contains preview photos (up to 640 x 640) of each photos that can be viewed even if the source files are not online or otherwise available.
Media Pro is available for both Macs and PCs and as a demo version to try out. For other candidates visit the The DAM Forum (digital asset management).