Try a search for Symbolic Links (Vista) or Junction Points (XP).

Basically multiple installs lets you have different video settings and potentially a different set of addons per account.

If the installs are on separate hard drives, then the seek/access time can happen simultaneously which is also a slight boost.

If you use Symbolic Links, you have a parent wow folder which is a full install. You copy the entire folder, except don't copy the cache and data folders. Then symbolic link from the parent wow folder (which nothing is played in) to each copied folder which will be very small (20mb plus addons maybe). Come patch day, break the links, patch the parent folder and redo the links, then copy the new wow.exe from the parent folder to the linked folders.

The advantage of the Symbolic Links is that the information is loaded once, and then because of the link, its already in RAM and doesn't need to be loaded a second time for subsequent accounts. So, if Dalaran sucks when you log in, but your system is good enough that 30 seconds or 2 minutes later, the thrashing (hard drive activity) goes away and its smoother, Symbolic Links will get you to that point sooner. You'll load portals/boats/instances etc, a little faster.

The disadvantage is needing to break the links for each patch or risking errors which in my case twice required a reinstall from scratch.

I've gone back to one wow install, and just enable/disable addons, but have every addon any toon wants in the one folder. All clients have every option turned down somewhat or off. Back when I used Symbolic Links, my one-box raider had every option cranked up, my main tank for boxing was half way up/down on options, my slaves were all the way down. Still, a bit of eye candy on the raider missing, I don't have any headaches come patch days.