Handling duplicates when copying
Whenever you use iPhoto Library Manager to copy photos/albums/events, merge libraries, or rebuild a library, you can have iPhoto Library Manager attempt to detect duplicate photos in the photos being copied. This works much the same way as when you use the Find Duplicates command, except that once the duplicate analysis has been done, instead of taking specific actions on the duplicate photos (e.g. flagging, moving to the trash, etc.) one photo from each group of duplicates is chosen to be the one that is copied, and the rest of the duplicate photos will be skipped.
When looking at the preview of the photo copying you're about to do, you can click the "View Duplicates" button in the upper right to see what duplicates were found among the photos being copied. In each group of duplicate photos, a white checkmark will be displayed over the photo which will be included when copied, and the rest of the photos in the group will not be copied. If any of the photos which are not being copied belong to any albums which are being copied, the checked photo will be added to that album in place of the other photo. If you wish to change which photo is used for a particular group, either control-click the photo and choose "Use This Photo" from the menu that comes up, or select the photo and press the return key.
Note that regardless of the duplicate criteria you specify, if one of the duplicate photos is located in the library that you are copying to, that photo will always be chosen over new photos that are being copied into the library. The reason for this is because, in order to use one of the other duplicate photos instead, the duplicate already in the library would need to be deleted from the library, then the new photo would need to be added to all the places in the destination library (e.g. the photo's event, any albums it belongs to, any web galleries, slideshows, books, etc.) where the original photo was. Unfortunately this is not possible due to technical limitations with iPhoto, so we just keep the existing photo in preference to any photo being newly copied into the library.