I ended up jailbreaking my iPhone! I have been using the iPhone dev team's PwnageTool. The process is as I suspected:
- Get the tool
- Get Apple firmware (tell iTunes to download but not install)
- Allow the tool to find and patch the firmware
- Force the phone into update mode
- Flash the patched firmware onto your phone
- Restore your phone
The tool really walks you though steps 3-5, so it should be straightforward. There are some REALLY cool Cydia/Installer Apps that aren't available in the App store. My favorite is MxTube, a tool that lets you download YouTube content onto your phone for offline viewing. I started working on an app that does this on your Mac...but more on this later if I ever get it off the ground. The coolest thing in my mind is the ability to ssh into your iPhone and tinker. I have also successfully used SOCKS proxy techniques on my phone to enable me to use 3G on my laptop. More on this in another post as well.
The downside of jailbreaking is that whenever Apple pushes a new firmware out over iTunes, you have to wait for a new PwnageTool update which can patch the latest firmware. It has been my experience that it takes them on the order of several days to get out the PwnageTool update. Luckily, the tool which supports firmware 2.0.3 just came out, so I will be using that to update tonight. Happy jailbreaking!