i love wedding cakes like these, but how are they stacked? what is used in the middle of each tier to give that separation (in red in this pic). tia

This:

http://www.wilton.com/store/site/product.cfm?sku=304-8174

One could also use cake dummies and cover them to suit one's theme/color scheme.

cake dummies, I get mine from GSA or ebay

I don't reccoment that Wilton tailored tier above. But this picture is done using An inch or two smaller dummy cakes then the real cake above it! Then you wrap it in ribbon!
So simple to do yet very classy!

I use foam risers all the time! You can use cake dummies as mentioned above, or foam discs that you find at Hobby Lobby, Michael's...etc., and just cover them in ribbon. They will also need to sit on their own board to keep from coming into contact with the cake. Good luck!

How do you stabilize the tiers? Do you run a dowel rod through the whole cake and dummies?

I use my pipe/flange assembly which is a plumbing flange attached to the bottom cake board with a PVC pipe in that, then each tier/riser is "cored" and threaded down over the pipe. Traditional supports (dowels or bubble tea straws) are necessary with each tier, of course, but this method prevents shifting/disasters during transit! There are pictures of my method in my gallery.

For what you pay (especially here in Australia) all you get is a couple of dummy cakes and some plates. Also you can only stick to the specific dimensions Wilton say. I must say the idea of the wrapped photos is good but you can get the same result just using the dummies.

Forgot to say its $70 here in Australia!

so you dowel the cake tiers, then foam boards on cake boards (with no dowels needed???) etc. etc and so on till the top?

Yeah pretty much. Do everything you would as if every tier is a real cake but no dowels in the foam ones!

This is Cambo's method as she mentioned and I'm going to give this a try for my daughter's 4 tier wedding cake that has 2" separators in between each cake tier. It looks like a really good worry free system!

http://cakecentral.com/gallery/2127484/pipe-flange-assembly-method