Can i make a book in iPhoto without using any of the built in layout templates, which are too limiting when i have already cropped my pictures to show just what I want. Ideally I just want to drag and drop and arrange and size the pictures myself

No. It's a template driven application not a page layout app.

A workaround: layout the pages in another app: Indesign, Pages etc and then save them as pdf. Open that in Preview. Export it as Jepg and then import to iPhoto. Use them as full page images.

If you have Pages you can create customs pages for your book as TD suggested. If you have Pages from iWork 09 or 11 this app will add 80 or so additional frames to those offered: Frames and Strokes Installer. Don't use it on the latest Pages version, however.

This tutorial shows how to create a custom page with the theme's background: iP11 - Creating a Custom Page, with the Theme's Background for an iPhoto Book. Once the page is complete to get it into iPhoto as a jpeg file follow these steps:

Here's how to get any file into iPhoto as a jpeg file:

1 - open the file in any application that will open it.

2 - type Command+P to start the print process.

3 - click on the PDF button and select "Save PDF to iPhoto".

NOTE: If you don't have any of those options go to Toad's Cellar and download these two files:

Save PDF to iPhoto 200 DPI.workflow.zip

Save PDF to iPhoto 300 DPI.workflow.zip

Unzip the files and place in the HD/Library/PDF Services folder and reboot.

4 - select either of the files above (300 dip is used for photos to be included in a book that will be ordered).

5 - in the window that comes up enter an album name or select an existing album and hit the Continue button.

That will create a 200 or 300 dpi jpeg file of the item being printed and import it into iPhoto. For books to be printed choose 300 dpi.