So after reading this and many other threads, I spent a weekend figuring out how to undemo my dxg. I am admittedly a complete noob when it comes to the command line. My first foray into linux was just for the task of this un-demo. That said, I'm sure there are other souls out there that have ventured into these woods armed with only what is in these threads and I thought I'd try to make it a little bit more clear the process I went through. Thanks to yifanlu, geekmaster, stangri and everyone who has shared their workflows.
1. Purchased TTL-232RG-VREG1V8-WE from ftdichip.com. Open the Kindle. Using their pdf schematics, I matched up the cables (4 of them) based on how stangri had proposed and soldered them onto the board.
NOTE: NEVER PLUG IN THE AMAZON USB CABLE AND THE TTL CABLE AT THE SAME TIME.
2. Leaving the USB TTL unplugged, I plugged in the amazon usb cable and using Sir Alex's Kindle Diagnostic tool, I got the serial/pw info and recorded it.
3. (The next steps are followed from Yifanlu's debricking method) For Windows, I downloaded Hyperterminal. I downloaded Yifanlu's custom kernel. Plug in the USB TTL. Then I followed his instructions, pressing the enter key to get to uboot and then flashed his kernel. Make sure you follow all the instructions. One step not mentioned was to erase and repartition all the drives. I don't remember which letter that was (I think it was 'I'), but that was key for me. Then make sure you get the machine into recovery mode.
4. Go find the Kindle 3.2.1 firmware. It's floating around on some website (one of them 'bay' websites). Using MinGW, I had to use command line in Windows to extract the rootfs.img.
5. Now that we have our rootfs.img and we've partitioned everything, I moved over to a linux machine. (All I did was download virtualbox and install xubuntu).
6. Then, I moved the rootfs.img file to my home directory in linux.
7. Now, I plugged in the KINDLE to the KINDLE USB cable (Not the TTL cable) to the linux machine. Again from Yifanlu, I followed his instructions for "Restoring Your Kindle." Some people reported that this part of the process takes a long time. It took me less than 10 minutes. No idea why.
After it completed I had to do two reboots, but then I was in. I don't know if this helps, but as someone who's very seldom used the command line, I was really confused as to the exact steps. Good luck to everyone!