but is each new story considered a new page?
Yes.
Is there a way to add them as their own <article> within one page?
Yes, using the list pages module, you can then allow users to have a single page (such as their profile page) list all of the articles that they have contributed. You have a lot of control over how this list is displayed, title only, date, author, last person to edit, number of comments, article excerpt, or even the entire body of the article. Ref: http://www.wikidot.com/doc-modules:listpages-module
Also- when images are uploaded through a data form, they upload as-is? There's no way to default their size/position when uploaded?
When uploaded? No. However you can control the way they appear on the page after uploaded by defining the width (which will also automatically adjust the correct height to keep the aspect ratio. For example, the following code takes content submitted by the user defined as form_data{article} and includes with it an image that the user uploaded referred to as form_raw{blogimage} and sets the size of the image to appear as 250px wide.
[[f<image %%form_raw{blogimage}%% width="250px"]]
%%form_data{article}%%
Here is an example of a site I did that uses all of the components mentioned above, the forms page, list pages, and image upload that very closely seems to cover everything you want to do:
http://ghettojuice.wikidot.com/start
On the main page you see a list of blog entries, each of which includes a title, image, and a portion of the beginning of the article. This is the Listpages module I mentioned above.
If you click "more" to read an individual article, then you are taken to the specific page, I.E. one article = one page. For example: http://ghettojuice.wikidot.com/blog:why-ghetto-juice-rules
The long part is setting up your forms field page to catch the information that your users want to post such as text content and images. The rest is far less time consuming though.
You would need to create a template page for users submitting articles using the forms system. Since it looks like you already have a category called "pomperaug", your template page would be stored at "pomperaug:_template". I.E.: http://www.storychip.com/pomperaug:_template
An example of a simple data forms to allow just 3 fields for data, title, content, and image:
[[form]]
fields:
staticIntro:
type: static
value: "[[size 120%]]Wiki Syntax Enabled: **Complete All Fields**[[/size]]"
article:
type: wiki
width: 80
height: 25
hint:
join: true
blogimage:
label: Image
type: file
[[/form]]
Also- I was able to access permissions through the admin, but when I went under site users and checked off create page as the only option, it still allowed myself-signed back in as a user- to edit the page.
As a "user", or as an "admin"? As an admin you will have perms regardless. If you downgrade your access to test it, or are using a second non-admin account to test it, you wont be able to edit. Do keep in mind however, that the author of the page has different perms too. So even if you disallow members to edit it, the owner of the page could still do so if the "page creator" is selected:
Additionally, make sure you have selected the correct category for the permissions you are editing (for your site, "pomperaug" maybe).
A test site would be the best way to determine if using Wikidot is right I suppose. Is there a way to start without a template- just the basic skeleton?
Yes, there is a "blank" option.