Permissions / Roles / Taxonomy / Workbench -- combination?
http://tutr.tv/t4991?list=4948 is a video from Drupal Con London where they talk about the Workbench Modules and will answer most of your questions/concerns.

If you have Workbench Moderation you can have users submit content for review.  Then a content moderator will publish the content or return it as a draft for changes.

Workbench Access will limit users to what content a user can create/edit.  You just need to create a role, assign the role to a Workbench Access Section of the site, and then when they create a new account you can assign them to the correct role.  

I have this on my site and have created a rule to email me whenever someone logs in for the first time so I can assign them a role.