Unlike regular albums, photos on the timeline is supposed to be set on an individual basis. I just can't find out how. Any help?
Yes, this is possible and as the tool tip says, this needs to be set individually for each timeline photo. This is how you can do it:
1- Go to your profile -> Photos -> Albums -> Timeline Photos
2- Now your able to see all your photos in this album. Click on the photo that you wish to change the privacy settings for. This photo should now be in "full screen" mode.
3- On the left is the photo and on the right is the comments, likes, etc. Click on the litte "spanner" as shown here:
When you hover over it, you can see the existing settings. When you click on it you can change the privacy settings!