OK, I seem to remember from documentation and also from some of the "preview" movies of aperture 1.0, that if you had keywords arranged hierarchically, that if you applied "surf," which is located as "Nature>Water>Ocean>Surf," that basically, each of the parent words would also be associated with that picture, meaning you would not have to manually add EACH parent item to the picture....

but I can't seem to get this to behave that way in Aperture 1.5. Has something changed? am I slightly retarded? Is it possible to bring up this picture with "surf" by searching for all pictures that contain "Water?"

You are right, you did see it done, and the keyword is associated with the image. But you are also right that you can't get it to behave that way because you are making a very common assumption, one that I made too, that Apple has fully implemented a keyword hierarchy. There is a partial workaround.

To illustrate what works and what doesn't, here is a simple keyword hierachy:

I have a project called Vacation with some images I want to keyword, so I drag the Chicken keyword to the image of the chicken, the Ostrich keyword to the image of the ostrich, and the Cow keyword to the image of the cow. The other words you see below the thumbnails are the captions I added previously:

To see the full keyword information applied to each image I go to the metadata pane (Control D) and click on the Keywords button at the bottom and then selct an image:

This shows me that the Cow keyword is applied and gives its lineage.

So far so good. Now if I want to filter my Vacation project based on keywords I click on the search icon on the thumbnail window and select the Keywords checkbox:

But where are my keywords? Only the lowest level keywords are there: Chicken, Cow, and Ostrich. I can't filter by Bird or Mammal!

Until Apple fixes this, there is a partial workaround. Use the + menu top right to make the Text box visible and type the higher level keyword in there:

You can also do this by typing the keyword into the text box top right. But in either case, make sure that Limited Text Search is selected:

That restricts the search to just keywords, omitting EXIF, captions, etc. In Full Text Search mode, the filter below finds the cow, for instance, because the caption includes "Levi", the cow's name.

There is also a setting in the application preferences that selects what the initial search scope is for each project or smart album:

This workaround is not perfect. If I have another keyword section called Animal Crackers, then a text search I do on "Animal" will find all the images with keywords under Animal and all the images with keywords that are or are under Animal Crackers. So unless all the keywords are very carefully designed this rather limits the use of the hierarchy.