Class E in most of the U.S. begins around 1200' AGL. Yes, it is deemed "other controlled airspace," and VFR flight is permitted in the Class E up to 17,999' MSL. It is very similar to the ICAO definition of class E in that: IFR traffic is separated from other IFR traffic and participating VFR traffic can receive traffic information service, if they want the service. It is not mandatory to talk to ATC when VFR in class E...including uncontrolled VFR at night.
The regulations stress
SAFETY and the safest way to conduct paradrop activity is to NOT cause a hazard to other aircraft or property on the surface by dropping jumpers through other air traffic.
As any jump pilot should have read the parachuting regulations (part 105 of the Federal Aviation Regulations here in the U.S.), he or she would be knowledgable that parachuting activity is permitted in all of the U.S. airspaces (class A, B, C, D, E & G), with the proper paperwork if necessary. I believe the majority of jump activity takes place in E and G since there is a considerable amount of paperwork to obtain for controlled airspace (A, B, C and D) jump authorizations. I had to obtain an authorization to conduct jump activity in Tampa, Florida's Class B and it was similar to pulling teeth. Class A--yes, they go that high, as for instance, a 727 has been modified to take jumpers to 23,000'. I hear it is around $150 to jump from the 727 when it is available. 180 jumper capacity. They dive out through the rear airstairs.
One item in the part 105 regulations (105.25) is that if jump activity is to take place in controlled airspace (A, B, C, D or E), a pilot MUST contact ATC to receive traffic information service. Class G airspace is uncontrolled, so no ATC radio communication is necessary. A written or telephone notification is necessary for all jump activity, including class G.
Part 105:
http://www.access.gpo.gov/nara/cfr/w...cfr105_03.html
As for Australia, I hear there are enough regulations to confuse even the best of pilots. I am not saying that the pilots down under need more regulations, however, if I was in that situation where the Class C was being redesigned as Class E, and I would no longer be given separation services, I would at the least contact ATC and request traffic information service so that I would not drop my jumpers directly above or in the path of controlled or uncontrolled traffic directly below. This would be the safest option to exercise.