You are correct they would need to have separate regulation for each rail in order to be true multi rail, however the term rail is used to indicate over current protection as you stated. Apparently more than a few PSUs are made with a single rail (no over current protection per "rail") and yet state that they are multi rail and ATX12V compliant. I thought it was only the less reputable companies but the Corsair HX series is an offender.
Absolutely, If you short something out, but it isn't a direct short, you can burn down your house. Caution is the word of the day.
Technically this is not true. Lets say you have a dual rail PSU with 18A + 18A and 33A combined, which is truly current limited to 18A on each rail, and fully complies with the ATX12V standard. Lets also suppose, for arguments sake, that the motherboard 12V rail is only drawing 7A maximum. you are still limited to 18A for all of the other components in the system. So your true limitation for fans VGA HDs etc. is 18A not 26A (33-7). So you loose 8A that is locked away on the first rail. That's why I like the single rail design even though it does require more care in dealing with. That Corsair VX450 is a single rail with 33A.
Jonny Guru
I'm confident this power supply could power even a pair of 7950 or X1950 cards.