It is as you expect ie the value as set in Options/media that was prevalent when the images were loaded.
I think my question arose because my last editor applied the default value when the image was dragged from bin to timeline, the image in bin had no duration. Thus you could change your mind part way through a project to set a new default while processing say the next 20 images, then change it again so some other value.
I just had not twigged that VP was setting the default duration when the images were loaded.
Interesting - it is literally when the image is loaded. I just changed the default and loaded one more image, it is now the new default.
So thanks - I now know whats going on and can play to the VP rules. Whether better or worse than my previous editor remains open to debate, at least I now understand. Thank you.