[Do until part-1 of h t t p : / / w w w . h a c k t h e i p h o n e . c o m / 1 1 1 / i p h o n e_ st ep 1_ wi nd ow s. ht ml ]
2. The baseband will remain at 4.xxx. You need to downgrade the baseband by following the 'Reverse the ibricks' step from the link in my previous post.
3. Now you will have a jail broken, active phone with old firmware and old baseband.
4. After this, I ran anysim to unlock and chose to remain at 1.0.2 for now.
5. If you want to upgrade to 1.1.1, you need to virginize first.
I had my tmobile sim in the phone during the entire process.
Hope this helps.