Note the public key should have the format similar to this and that everything is on one line in the actual public key file. Note that it does not include the user@hostname entry at the end of the string.
Normally, Linux/UNIX clients already have public and private RSA keys that are generated at system startup, so in most cases, it is not necessary to use the Altiris keygen utility.
Is this a new key that would need to be copied to the client ~/.ssh directory?
Yes, the public key needs to be copied to the target client computer to the appropriate directory. Usually this file needs to be updated: ~/.ssh/authorized_keys.
Would the ssh_known_hosts file need to be updated?
No, list of known hosts should not necessarily be updated.
How about the sshd_config file? Do we presume that the known hosts and sshd_config pubkeyauthentication is already setup?
Yes, we presume this and AFAIK this is set up by default on all platforms.
The default key is much shorter than a default key provided during the OS install?
Select a "bit count" of 2048 will create a key of matching length. Note that this utility does not add the user@hostname entry at the end of the key.