All I can really say here is photos on my iPhone are working fine, iTunes lets me check what iPhoto albums and events I want, they sync, and portrait pictures and landscape pictures show up in the right orientation.

I have no experience with doing photo syncing any other way though.

There is this article in the Apple support system describing how photo syncing works, it may help. From what I see there though, it's not going to deal with your complex hierarchy. It looks like they built support around how the camera import wizard works in XP, and 2 Adobe programs.