OK I FINALLY GOT IT WORKING. Here is what I have deduced.
There are two versions of Installer.app floating around. The one that I got to work is from the "AppTapp Installer-3" Mac application which I browsed and found the "Installer.app"
Then I did the chmod +s etc thing found on that youtube video and it is bloody working! The version of the Installer.app on this site looks completely different (i.e. it has a different icon and appearance on the iphone) and I don't know why but I think that is the cause of the confusion. I put the installer.app that works on my server...
http://pages.suddenlink.net/micellem...3thatworks.zip
After you put this on your phone by using the customize feature on Independence, use terminal to do the ssh deal
YAY!
I just bought my ipod today and did the works with independence. it is running 1.1.4 and after finally installing this installer.app and changing the permissions (using my manually installed BSD) it works.