How can an iPhoto Library be shared between users in a way that facilitates backing up to Time Machine?
You don't have to put the Library on a Disk Image. You can put it on any drive formatted Mac OS Extended (Journaled) - a USB/FireWire/Thunderbolt drive. Time Machine can back up externals too. 
From your description - all your wife wants is access and to make occasional albums, then iPhoto Sharing is more simple than trying to share the whole Library.


If you want the other user to be able to see the pics, but not add to, change or alter your library, then enable Sharing in your iPhoto (Preferences -> Sharing), leave iPhoto running and use Fast User Switching to open the other account. In that account, enable 'Look For Shared Libraries'. Your Library will appear in the other source pane.

Any user can drag a pic from the Shared Library to their own in the iPhoto Window.

Remember iPhoto must be running in both accounts for this to work.