I am also hoping someone has come up with a solution to this, assuming it is even possible. I enabled the 'Apply to sub-albums' and 'ability to create sub-albums' settings manually in the database, but this leads to a potential permission issue where users can create sub albums in other users' albums (or it seems to, I haven't done much testing past that point).

I'm assuming this may be why these settings are not possible to enable via the UI, but I can't figure out why this is the case. To be fair, I'm a new Piwigo user (trying to convert from Gallery2), so I haven't dug through the code much to see how/why this is the way it is yet. I assume it all relates back to how the permission settings work when applied to all registered users, like the OP said, but it still seems odd to me. For example, I've tested creating a top level album with a sub album for a user, creating a permission group for a user to have full access to that sub album, and that seems to work just fine.

If this is due to a core way the permissions work, since Piwigo isn't really meant for this sort of use to begin with, then a better solution may be to not utilize the User Album feature in the Community Plugin and instead modify the code to create a new permission group for each user created, along with an album. This will require a bit more initial setup on the admin side, not to mention a bunch of records in the database if you have a lot of users (my current G2 is about 100 users), but seems like it should work.

Has anyone else come up with workarounds or perhaps is already planning a plugin that adds something like I described above?