balibones - 3:14 pm on May 31, 2011 (gmt 0)
I have a similar set up where the host lets me add as many domains as I want. I set the DNS to point to each domain, but the files are all located in folders off the main one and the Cpanels are accessible via a subdomain off the first one. But the content isn't accessible off the subdomain of the first one so I've never had an issue with duplicate content. I believe the host I use for this is Hostgator, and all of the sties rank well in their niches, though they're small sites and small niches.
I did have one problem once where the main site got hacked, which allowed them to inject code on all of the sites. I'd say that's your biggest issue since they can access all sites by getting into the one FTP account.