For anyone that can benefit, I have solved my confusion. Here's what I did...
(download links at bottom of post)
I downloaded the NextGen Gallery plugin that is said to be compatible with WPMU.
I have plugins unchecked in Site Admin-->Options. This prevents the Plugins tab from showing in both the Admin dashboard and the user blogs dashboard.
I installed NextGen into the standard plugins folder. (admin and user blogs still cannot see the plugin because of the Plugins tab being hidden, and it is not auto activated because it's not in the mu-plugins folder), so how did I get it activated and still have it hidden from users? Read on...
I installed both the Plugin Commander and the Plugin Manager plugins found here http://wpmudevorg.wordpress.com/plugins.php
...and put both of those plugins in the mu-plugins folder.
I then went to Site Admin-->Plugin Commander and saw the NextGen Gallery Version 0.93 listed, but I didn't do anything here yet.
I then went to Site Admin-->Plugins (this is the Plugin Manager options area), and clicked on the "Check active plugins" link. For both blogs, (Admin and my user blog), I could see no active plugins. Dammit, how do I activate that plugin without showing the Plugins tab and without it being in the mu-plugins folder (which didn't work anyway)?
Here's how it worked for me...
I had to go back to Site Admin-->Plugin Commander. As I said the NextGen Gallery plugin is listed here, and it has some clickable options to the right of it. Those options are "Author", "Auto-activate", "User control", "Mass activate", and "Mass deactivate".
Under "User Control" there is a link that says "Disabled, click to enable". I clicked that. Then I went back to Site Admin-->Plugins and could see that my two blogs (Admin and user blog) now both had the NextGen Gallery Plugin enabled. Almost done...
After doing this I also noticed a new menu item under Site Admin called "NextGen Gallery", Site Admin-->NextGen Gallery. This is the global options area for NextGen Gallery. Another addition was the standard NextGen Gallery options area under my Admin and User Dashboard area called "Gallery".
So, at this point I have successfully installed NextGen gallery on both the Admin and User blogs while still hiding the Plugins tab from both the Admin and User blogs.
But I wanted the ability to turn NextGen Gallery on for some users and off for others. That's what the Site Admin-->Plugins (Plugin Manager) allows me to do. I went here, clicked on "Check active plugins" in the upper right. Then I saw my Admin blog and User blog listed. I then clicked the id of the User blog and was able to deactivate the NextGen Gallery plugin for my User blog, while still having it activated for the Admin blog. Finally!
When I am finished setting up the site, and I have actual users, I can then go into individual blogs and activate or deactivate any plugins I want them to have options for, or not.
This is what worked for me. I realize I was stumbling around, and maybe this wasn't the most efficient way to get this going, but without step-by-step documentation for things like this, hopefully this will help others.
Please feel free to share any thoughts you have on this, or if you get it working in the same manner.
NextGen Version I downloaded:
http://alexrabe.boelinger.com/wordpress-plugins/nextgen-gallery/
(notice this download says version says V0.92, but my installation says it's V0.93). Also, the author has a page announcing the compatibility with WMPU which does not have a separate download, I believe it's just built in. Also, i did not find the plugin on the Google Code link.
Plugin Commander:
http://wpmudevorg.wordpress.com/project/Plugin-Commander
Plugin Manager:
http://wpmudevorg.wordpress.com/project/Plugin-Manager
Good luck!