Sorry for the late reply I've been busy.
In the energy conservation equation, what does rho represent? Wikipedia says that this equation should be <= 1. Is rho some sort of reflection percentage?
The above should be a little more clear. We want to develop a BRDF that for the intensity of the light coming in one direction, \L_i, should be equal to the light going out in the direction of reflection.
In the final BRDF, should the second delta function be [link]? The sign of pi doesn't matter, if I'm thinking about this correctly.
Yah, sorry you want to setup the dirac delta function so that the angle away from the normal axis is equivalent and the other angle is equivalent but rotated 180 degrees.
Then I think of how a film camera works, you have a photographic film that gets darker when photons hit it, thus making the final image brighter (because the film is a negative)
Right, as you point out, you will want to integrate over the visible hemisphere(aperture), sensor area, and time (equivalent to shutter speed) which beyond just controlling exposure will give you phenomenon such as motion blur and depth of field. If instead of integrating RGB you additionally integrate over the wavelengths then you can get other phenomenon such as chromatic aberration.
-= Dave