OK, so totally undid all my chroot (i.e. reverted everything to before my chroot adventure began), and simply did the following (as newer openSSH has conf file directives "chrootdirectory directory" and "forcecommand internal-sftp" built-in, and my people will never log in locally via the console):
sudo pico /etc/ssh/sshd_config
(replace "Subsystem sftp /usr/lib/openssh/sftp-server" with "subsystem sftp internal-sftp"; also, add the following (to the very bottom)):
match group groupname
chrootdirectory %u
forcecommand internal-sftp)
sudo /etc/init.d/ssh restart
sudo groupadd groupname
sudo usermod -aG groupname -d /home/ username
sudo chown root.root /home/username
Yet I'm no better off than before: when I connect to the machine (with a member of groupname), I just get "connection to [my.host] closed". At least someone can read this and know that you don't have to do all that chroot stuff (anymore) if all your people are going to do is sftp…
RESULTS (just tail/not full output):
ssh -v
username@my.host:
...
debug1: Entering interactive session.
debug1: channel 0: free: client-session, nchannels 1
Read from remote host my.host: Connection reset by peer
Connection to my.host closed.
Transferred: sent 1632, received 1800 bytes, in 0.0 seconds
Bytes per second: sent 331161.3, received 365251.4
debug1: Exit status -1
sftp -v
username@my.host:
...
debug1: Entering interactive session.
debug1: channel 0: free: client-session, nchannels 1
debug1: fd 0 clearing O_NONBLOCK
Read from remote host db1.neurobio.pitt.edu: Connection reset by peer
Transferred: sent 1632, received 1800 bytes, in 0.0 seconds
Bytes per second: sent 261283.5, received 288180.3
debug1: Exit status -1
Connection closed