I recently presented on this topic at Joomla! Day NYC. Following this forum thread caused me some concern that between a presentation last March and this one in October something had become broken.
I thoroughly tested all aspects of the com_content overrides and the only view that would not work was the one called "categories" -- this was used in the sample data demonstration for the Australian Parks photo album. (see my October 13 blog post at http://irislines.com/blog.html
All other overrides work as the documentation suggests:
* an override saved in your template's html folder with the name default.php will be used throughout your site.
* an override saved in your template's html folder with a new-name.php will be used for articles or categories THAT ARE NOT DISPLAYED BY A MENU ITEM and for which you specify the alternative layout.
* an override saved in your template's html folder with a new-name.php AND a matching new-name.xml file will be available as a menu item type. Any existing menu item for that article or category will have to be revised to use the new menu item type.
IF a menu item exists you MUST create the appropriate .xml file AND USE IT.
If you want your alternative layout available for both menu-accessed articles or categories and blog or module-accessed articles or categories that have no menu items associated, you'll need to create two different .php files, one with an associated .xml file and one without.
If the .xml file exists, the override is only a menu item type override. if there is no .xml file, your override is only an alternative layout, and must be specified for each article or category using the alternative layout parameter.
Even though you specify the alternative layout parameter, it will NOT be used if you create a menu item for that article or category unless you create the .xml file and use that menu item type.