TBH Fair isle always looks impressive on the back, I rarely get through a row without a few rogue twists but they don't stick out. I am just about to start a project for a competition though so I will pay attention to my dominant colour .
Yes, it should be done with one colour dominant in every row and the other subordinate, based on which colour has the most number of stitches. There should be no diagonals lines in fair isle, it should look like this.
This is pretty easy if you're doing two-handed fair isle, as you will have one colour in one hand and the other in the other.
Actually, I have to admit that it is something I came across fairly recently myself. I suppose I do choose an upper and lower colour like fossil describes. This method gives nice horizontal lines on the back instead of lots of diagonal strands.
One way is to try to keep one yarn always as the "upper" and one as the "lower" colour. Someone once said to me to think of it as the lighter colour "floats" to the top. A bit of tangling is hard to avoid though at least with 2 colours you can untwist them - never attempt 3!
I have just started a vair nice fair isle kindle cover for DM for her birthday. How do I stop the two yarns twisting round each other while I'm knitting? It's driving me bonkers! At the end of every row I keep having to put it down and untwist my working yarns before I start the next row. Aargh!!