IPhoto - storage or just referencing?

It seems that all physical manipulation of photos, creating of new albums etc had to be done in the Photo App, not iPhoto.  No problem with that.
But does that mean that iPhoto is just a reference to the photos that are stored on the iPad?  Surely it doesn't duplicate photos does it?
This is an important question in the context of the problem some users (myself included) are experiencing whereby iPhoto is creating multiple copies of images - covered in more detail on other threads here.
Can someone please provide a better explain the relationship between the Photo App and iPhoto?

There's a nice review of iPhoto for iOS here
http://www.macworld.com/appguide/app.html?id=1189243&expand=true
But it doesn't address your question directly. Seeing the different photo albums containing the same photo I suspect the iPhoto stores the recipe of changes one makes to the photo and does not actually copy the entire photo over again. At least that's my hunch.

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