When I go from an hour block on Dianne's calendar to the same time block on
my calendar it gives me a "do not enter" type symbol and then when I drop it,
it says "Cannot move the items. You do not have appropriate permission to
perform this operation."
(where are permissions given for this operation?)

I did accidentally drag the item into the ALL DAY area (grey area at the
top) of the calendar and it gave me a plus sign like you are getting ready to
copy or move an item but when I drop it it also gives the same error message.

I may be just doing it wrong but if this is something that has not been
approched yet or in need of change I listed some possible solutions below:

It would be nice if the action were the same as it is in the shared calendar
in MSN Explorer. When you right click on the item in someone elses calendar
the drop down list give you an option to "Add to my calendar".

Unless it is just a simple "click and drag" something may also may need to
be added in the dropdown list if someone owns multiple calendars that are
listed in my "My Calendars" (ie: Personal calendar, email 1 calendar, email 2
calendar, etc.) it would give you an option in the list of which one to drop
it into or have a default listed in "Options" as the place where all changes
will be placed.