Thanks for the update. It sound like you have dealt with most of the "caveats" that have been raised and have given this a good deal of thought. Since you brought up the 35-70mm f/2.8 AF, I also use that lens and it found a new home on my DX camera for just the purpose you mentioned.
Another lens that I use very frequently on my DX camera is the 17-55mm f/2.8 AFS DX. It is a wonderful f/2.8 lens and the 55mm puts it in the portrait range, especially indoors and I usually find that once it's on my camera, I find lots of way to use it effectively.
My 17-55mm f/2.8 seems to handle flare a bit better than my 35-70mm f/2.8, but under typical portrait usage, flare is not a problem - especially since on DX you can put a deep hood on the 35-70 (I think mine is from a larger zoom lens - it's not handy right now).
There is another option for portrait interest for DX that many speak highly of, but I don't have any direct experience: Voigtlander 58mm f/1.4 in a Nikon mount. This is a manual focus lens. You can find information around the net as well as at cameraquest.com
Roger It's still, ISO, aperture and shutter-speed, right?