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John --
The ISO film speed is based on film curve toe density, and that speed point represents the lower boundary of image shadow density.
We base the exposure on the incident shadow reading to be sure the subject's shadow tones are well-recorded on the film. A second incident reading in the brightest area of the subject is necessary to record the subject's highlight tones properly. These two readings, together, establish the total subject luminance range (an indication of subject contrast) and dictate development.
So, the shadow reading determines exposure; the highlight reading effectively determines development.
You're asking a good question and one that puzzles a lot of photographers, especially those who are accustomed to using a spotmeter. If this answer doesn't help, let me know and I'll try again.
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