Just did some research... apparently it now works differently in multiplayer: everybody shares the same pool of star power, but when you activate it, instead of just draining it until you run out, it uses up one bulb and stops. That only affects your instrument's multiplier, but you can multiply the full band's multiplier by having multiple people activate at the same time. But in single-player it works the same as the previous games (except you can get star power during star power).
Also, it seems that you do need a Wii remote just for the vocals, which is really lame and annoying.