Actually I ran this several times in a few different combinations just to see... and it is clear... there are peers at three different points of the chain sharing with everyone.
So, to clear this up once and for all... I followed the steps again, but this time I set all addnodes to connect= and added all the ones that showed they were on block 11200+ and then started with 1.0 and chaged to 1.2.
Flawless. Fast. Done.
To help out anyone who does not want to go through this, I made a zip of the 1.0 and 1.2 versions of PHS and included a conf file with the connect entries... once synced you should be able to change them to addnodes and be fine. This also includes block0001.dat with blkindex.dat synced to block 11225 and my peers.dat at the time of me closing the client.
Use at your own risk, I have no reason to have tampered with these but you should not just trust anyone who uploads anything and posts here. Do your due diligence, scan it etc. I take ZERO responsibility for loss of coins or anything else that might happen.
PHS8-13-13.zip