I have multiple instances of tomcat 6 running on the same server (Linux) and it works as expected. I am trying to find out what the standard practice is with regards to sett
I can't say I know the best practice, but here's my perspective.
Are you using these variables for anything?
Personally, I haven't needed to change neither, on Linux nor Windows, in environments varying from development to production. Unless you are doing something particular that relies on them, chances are you could leave them alone.
catalina.sh sets the variables that Tomcat needs to work out of the box. It also says that CATALINA_BASE is optional:
# CATALINA_HOME May point at your Catalina "build" directory.
#
# CATALINA_BASE (Optional) Base directory for resolving dynamic portions
# of a Catalina installation. If not present, resolves to
# the same directory that CATALINA_HOME points to.
I'm pretty sure you'll find out whether or not your setup works when you start your server.