Okay, as mentioned in another post, whoever provided the mediafire 4.0.0 had a screensaver hack installed.
I did this from diags SSH:
mnt /dev/mmcblk0p1 /mnt/mmc
mv 600x800 600x800_hack
mv 600x800_ 600x800
And the incomplete failed update finished installing successfully. After manually removing the screensaver hack that was pre-installed in the 4.0.0 image (as shown above), my kindle is now updated to 4.1.0, and the screensavers work. However, it is still NOT a special offers kindle. Oh well...
Apparently at least some K4 demos are NOT special offers versions... Cool!