Wow.  Lots of questions.  I'm actually in your same boat- just getting started with a new company with some people, so, as I see what works and doesn't, I'll pass that on.  I have served on a board once previously, though, and so I think I can offer at least some opinion:

1. Picking shows- Ask yourselves what your goal with the company is.  How do you want to be perceived by the community?  For example, are you going to emphasize musicals?  Shakespeare?  20th century classics?  Works by new playwrights?  What order and combination?  It's important to establish a basic season rubric so that audience as well as people who might do shows with you know basically what to expect.  Also, for the first go-round, I'd pick plays that people know, and do a really fantastic job.  That way, it gives you credibility to branch out and do more obscure but still good works in the future.

2. The board makeup.  I can tell you one important thing I've found: don't stack your board exclusively with techies.  Don't get me wrong: I don't hate techies; I think they're wonderful people.  The thing is, techies and actors just have a different mentality to a lot of board discussions and decisions (like which plays to choose and why).  Having interviewed to direct before boards that 1) had no (or one token) actor and that 2) had a nice mix of all sorts of creative artists, I can tell you that I think the second setup is a lot better.  I don't want to start some actor-techie war on this page.  My point is simply this: actors and techies have different ways of evaluating what's important in a show, what makes a good show, etc.  You want a balance of perspectives.  I sat through a voting session for a new board once where the obviously-best candidate for one of the positions was essentially blackballed because he was an actor.  Seriously.  That was the reason they gave.  That's not cool.

Regarding choosing shows:

As the Artistic Director, I have found that play selection by committee can be tedious and sometimes frustrating.  Also, once a slate of shows was chosen and approved, then directors would be contacted and asked if they would like to direct one of the chosen shows.  Inevitably, there would be one or two shows that directors would end up directing just because it was the last show chosen and no one else wanted to direct it.

Now, I accept play submissions from directors.  There is no play reading committee.  Directors submit up to three plays and/or musicals to me along with their proposals (including "vision", design concepts, etc.) and copies of their scripts.  They also choose their "preferred" time slots.  Once all submissions are received, I log all the shows and directors onto a spreadsheet along with their preferred time slots.  Then the reviewing begins....

Some shows are automatically nixed due to production impossibilities (for example, we can never do "Noises Off" because we do not have the space), cast size (we are a very intimate theatre with no backstage and a stage that's 12'Dx24'W), and content (we *do* takes some risks, but some shows would just be too much for our patron base to handle).

Once the list is narrowed down, I get to reading.  If I am unfamiliar with a director, I schedule an interview and bring along another board member who's sort-of my unofficial Associate Artistic Director.

We do six shows a season, and I try to select a well-balanced season of dramas and comedies, with a small-scale musical every other year.  I compile what I think is the best season and present it to the board.  Of course, I have alternatives available should a particular show not be approved.  Scripts are available for all board members to read and the official vote is at the next months' board meeting, so everyone has ample time to research and read the proposed plays. 

Those are the basics, and there are variables.  But long story short, with the abolishment of the play selection committee, there has been zero opposition to the proposed seasons and we are getting directors who are passionate about the shows they want to direct.  Many times, they even bring their own design and technical teams!

Whoa.  You sound light years ahead of where we are.  We're not even sure where we're going to get directors from. let alone having them submit scripts or proposals. 

Where do you get the scripts from that you present to the board or for committee readings?   Do you order perusal copies from the publishing companies?  Doesn't that get to be expensive?  Remember, we have zero money right now.

Your ideas about board make-up confirm what we'd optimally like to have, but I'll be happy just to get a handful of interested people.  It's not like we have an abundance of actors or techies in town.  I do have a lawyer who' willing to help us.

Well, don't let where my group is stress you out.  First of all, for directors, they can be board members.  Ours for our first season (next summer!) are.  As the theater group expands, you might want to codify the rules a bit better so it doesn't strike of nepotism, but, in the beginning, I think the more key of an interest the board members have in the shows, the better for their success.

In fact, that's sorta how we got started- just a group of theater artists and enthusiasts of varying specializations were frustrated with the local theater scene and had a similar idea for how they'd do their own thing.  We happened to luck out on a space from which another theater group is moving out.  And, for all I know, this could still fall apart before we open anything!

As far as scripts, I tend to own a script for a handful of shows I hope to direct; also I live in an area with a great public library system, so they should have anything I don't.  If the show's well-known enough, you can even get by without one.  You should leave a couple weeks' room for directing bids, so you can pass the script around, mull it over, interview the director when necessary.  (And if you want second opinions on a show, you can always post here.)

Yes, a lawyer is definitely important!  You want to get on the whole being declared a non-profit organization.

Opalviolet, does your state have an interlibrary loan system?  In Iowa if I go to the public library and ask for a book that they don't have they can request it from any library in the state, be it university library or city library.  The only cost involved is postage, I think. 

We are pretty isolated, too.  The nearest universities being 60, 90 and 180 miles away.  Our county population is 14,334.  Our county is the oldest in the state, too -- by that I mean has the oldest population in the state.  And we have a thriving community theatre but we work our tails off.

I agree that the high school auditorium (even if it's a great auditorium) isn't the best place for community theatre productions. If you can find something else, it will "feel" better to you, I think.  A restaurant might let you do some shows in their place on slow nights to help build their dinner business.  Doug B from Orcas Island can tell you about doing theatre in restaurants... are you here Doug?  If there isn't anyplace else, then by all means take the school auditorium, but not if you don't have to, (in my opinon.)