Thanks for the response. I am going to try the CMake system referenced in this forum and see if that suits my needs.
This does seem somewhat reasonable, though. if it's a LIBRARY, it's for more programs than just this one. If it's for JUST this program, why not keep it in 'mysketch' dir?
I haven't yet been able to compile in this way using the IDE. I'm assuming that a Makefile has no constraints like this, but if I just drop some library source in the 'mysketch' dir along with a .pde file, it won't compile in the Arduino IDE.
I was able to make this work a different way. If I click the button to create a new tab and make a new header file (e.g. myheader.h) with #define in it, I was able to #include that in the PDE app and it compiled, but this is kinda goofy.
So, I guess I'll go the Makefile route. I want to build something that uses a couple of OSS libraries, and I may want to tweak the library source and keep it versioned as one big project...and have other devs be able to check it out from github and build/modify w/o a headache...which is why I'm asking these questions.