Can I copy files between 2 different iTunes libraries within iTunes?

I want to create 2 iTunes libraries on my Windows 7 PC so that my wife and I can separate our music and more easily sync to different iPods. However, we also want to be able to share some of the music between the 2 libraries.

First question: Is the current default iTunes library folder located at \Libraries\Music\iTunes?

Question 2: If I allow iTunes to create duplicates of all the music from the original library in the new library, will I then have 2 physical copies of all music files on my hard drive?

Question 3: Based on what I have read so far, it appears that the only way to copy music from one library to another is by exporting from one library to an external location and then importing into the other directory from that external location. Is this correct? If not, please clarify.