Here are the answers to your questions:
1. When you "edit" the text inset source, exactly what are you changing - the variables or some other content?
Any change to the file. I can open the file, press the space bar, and save. If I update the inset in the container, the inset shows the inset's variable definitions
2. When you say the "inset's settings" win, do you mean that the source variable definitions used in the inset show instead of those in the container file?
Yes. It is using the defintions that are in the inset upon updating the inset.
3. When you "update" the inset, do you mean that you've made some sort of edit to inset source file and then do a Save on that file?
Yes and then I double-click on the inset and click Update to manually update the container to reflect my changes.
4. What precisely do you mean by "sweep the correct variable into every inset" ?
Sorry what I wrote was a bit unclear. What I meant to say was in order to ensure the variables are displayed properly, the only thing I can see to do is to sweep the variable definitions I want into the inset before publishing.
5. How exactly (menu, double-click the inset & update or close & open file) are you doing the inset updates in the container files?
I usuallly double-click on the inset within the container file and click Update.
Bug confirmed - specific to FM11!
Andrea sent me a sample set of files. I had misread Andrea's initial post and missed the part about the variable being within a table in the inset source file. I had been testing pulling the inset into a table... Doooh, whack! When this scenario is pulled into the container, the variable stays per the source *only* if it is in the table. The same variable used outside of the table in the inset source does take on the container value, so one sees both values for the same variable in the inset.
Testing in FM8, 9 & 10 shows that these versions behave as expected. I've also compared the MIF versions to see if there's anything different in the FM11 version, but they're identical.
Please file a bug report at: FrameMaker Bugs & Wish List
and reference this thread: http://forums.adobe.com/thread/1141254?tstart=0