When it comes to RAM moduels, am I correct in assuming that the term "dual-channel RAM" is only applicable to DDR-2 and not DDR-1?

And why do they have to be installed the same size density if you want to be able to take advantage of the dual-channel feature?

there is DDR-1 dual channel too.
Intel Chipsets 865/875 have that capability.
The RAM for running dual channel need to be 2 identical pairs because the memory sticks have something that is called SPD that gives instructions to the motherboard, and if they are not the same it will default to single.
Crucial and others sell certified matched pairs for dual channel.