It looks as if nobody much actually sits down with a metronome and sorts out an appropriate tempo. It also looks like somewhere between 4 to 8 band members, a caller and dozens of dancers a tempo happens. Is that about right?

Well sort of ... if nobody in the band, and the caller, all don't have the vaguest of gut feelings about how fast a particular tune should be played for a particular dance, then the only way that a speed is going to evolve is by watching the dancers. Basically, if they're struggling to keep up you're too fast, if they're asleep it's too slow. But a group of experienced dancers will enjoy zipping through a dance that would completely flummox a group of absolute beginners, so you play to your audience.

As discussed in the previous thread about A-ceilidh you need a lead musician (by no means necessarily the drummer!) who takes the overall responsibility for finding the tempo, and everyone else pretty needs to agree to go along with that. The caller should have a rough idea of what sort of speed they've got in mind, and any decent caller will also quite happily speed up / slow down the band as necessary.

Go and listen to other dance bands (live, playing for real dancers, not on CD) and that will give you a lot of basic feel for tempos. I'd regard a metronome as an absolute last resort, because unless you're actually going to have it ticking away on stage (and what a fun band that would be!) you'll not stick rigidly to that tempo anyway, thank God.

Greg's point that different occasions & places warrant different speeds are a good one.