The MacTeX Working Group from the Tex User Group (TUG) constructed an install package which installs everything needed to run TeX on Mac OS X in one step. This package is free, and uses Apple's standard installer; installation takes four to eight minutes and is automatic. The package installs TeX Live, the complete reference edition of TeX produced in cooperation by TeX User Groups across the world. It also installs several GUI utilities for TeX including TeXShop, so it is not necessary to get the front end separately. Everything is completely configured and ready to use once the installer finishes its job.
MacTeX-2011 was released in July 2011, and has been extensively tested on Lion. You can obtain it by clicking the following link: MacTeX.mpkg.zip.
Actually, MacTeX-2010, released a year ago, installs and works fine on Lion. But TeXShop from that release needs to be updated. All releases of TeXShop from version 2.39 on work on Lion.
The new version 3 of TeXShop requires Lion and takes advantage of new interface features in the operating system. It is not in MacTeX-2011.
Recall that the ~/Library folder contains configuration files for TeXShop and TeXworks, and may contain a texmf folder for a user's personal style and font additions to TeX.