I've successfully replaced my new Iphone FW ver 1.1.1 to 1.0.2.
// To do that:
//1. you need to download 1.0.2 FW ipsw file and have it secured on your HDD.
//(hxxp://appldnld.apple.com.edgesuite.net/content.info.apple.com/iPhone/061-3823.20070821.vormd/iPhone1,1_1.0.2_1C28_Restore.ipsw)
//2. Put you Iphone into restore mode
//3. Plug USB
//4. Open Itunes
//5. Press and hold SHIFT while selecting restore button it will open a file window //where you must select previously downloaded IPSW file.
//6. DO NOT DISCONNECT until itunes finished downgrade
Unfortunately I still can not Jailbrake it.
UPDATE
I did it with brand new 8GB Iphone model A1203
YOU DONT need to activate to restore. You just need to run Iphone in a restore mode and than plug it to Itunes. This will bring up an error message saying that you need to activate before but you can skip it and go to a selective restore by pressing and holding SHIFT
I did it with Itunes 7.4.1.2; WinXPP.

