What is the ideal setup for multiple Steam accounts on one computer, including guests?

I live in a house with multiple gamers. We are considering installing Steam on our HTPC and using it like a sort of gaming console. There are a few ways to approach this, and none of them seem ideal.

Steam installs games into a user's home directory. This means that if I have two different OS-level users, many games will get installed twice, which is a waste of a lot of hard drive space.

However, if we share an OS-user and just log into Steam with our different profiles, then I expect some problems with saved games and such.

Either way, houseguests will have to log into Steam with our accounts (which is a TOS violation, I think?) to play our games.

How do others in this situation solve this conundrum?

Does the answer to these questions change depending on the base OS being Windows or Linux or OSX?

This knowledge base answer on steam's support pages seems to answer your question, or at least part of your concerns. The important bit is

The accounts will share the core files for any games the accounts have in common, but each account will maintain its own custom content and configuration files.

This sounds great if that "custom content" includes saved games.

You could also try the new family sharing support, but it is in beta and you'd have to sign up for it.

This forum seems to indicate that the games would be installed only once, but each user would have their own save files. Although, I think this depends on the game.