I never really had to "worry" about this because my activity level was nil so my activity level BMR multiplier was 1.2. But now that I'm walking daily and am going to start weight training, I'll be upping it to 1.375 and eventually 1.55. So that means that the calories my body uses up on an average, daily basis, will go up.

My question is - is this "directly" proportional to the calories that you waste when doing exercises? Or is this an overall faster metabolism?

I ask because I've been calculating my "net" calories in a day by summing my total calories and then subtracting calories I spend when exercising and aiming for that net calorie count in my weight-loss goal.

So, if I do more exercise, obviously the net amount will be lower and so I should eat more in order to retain my deficit target number (e.g. 500 calories below BMR). But, because the BMR will also go up the more exercise I do, the additional calorie intake will need to be even more to compensate for the BMR increasing.

So, first, am I right? Second, am I making any sense? Third, am I over-thinking this and in the long run I should just do what works for me? Fourth, something else entirely?

You are way overthinking it. What would happen if one day, you decided to go for a longer run of a mile or two farther than normal and you wound up with a 700 calorie deficit instead of a 500 calories one?
Nothing. At least nothing noteable. I suggest you quit worrying about it and stick with what works.
Get a goal of calories that you want to hit and eat that amount everyday for a week. Do the same workouts that you normally do. If you don't lose, then dial it down 100-200 calories per day for the following week. If that works, stick with it. If you fiddle around with it too much you will always be tweaking it and never giving it a chance to work.

You are way overthinking it. What would happen if one day, you decided to go for a longer run of a mile or two farther than normal and you wound up with a 700 calorie deficit instead of a 500 calories one?
Nothing. At least nothing noteable. I suggest you quit worrying about it and stick with what works.
Get a goal of calories that you want to hit and eat that amount everyday for a week. Do the same workouts that you normally do. If you don't lose, then dial it down 100-200 calories per day for the following week. If that works, stick with it. If you fiddle around with it too much you will always be tweaking it and never giving it a chance to work.

Okay, fair enough. :doh: