OK, looks like it is working for me now - I had to rename the OTA update file referenced at the top of this thread "update.zip" and put it on the root of my SD card, then:
1. Hold down Volume Down and Power to boot into FASTBOOT screen
2. Select RECOVERY and press the power button
3. Phone reboots to screen with an exclamation point
4. Press Home and Power to access the recovery menu
5. scroll down with trackball to highlight "Apply sdcard:update.zip," press trackball to select
6. Let it do what it wants to do (about ten minutes of deleting files and installing files)
7. press trackball to reboot.
BOOYAH! Boots (eventually) to OTA 2.1. The reboot sat at the Verizon screen for so long that I thought it had crashed, so I pulled the battery and restarted. On the reboot everything loaded and life is wonderful...