[charleski]

Here's the toc.ncx for a book I uploaded here. It has a 2-level ToC and validates perfectly in epubcheck 1.05.

Converting your code as you described would produce:

<navPoint id="navpoint-5" playOrder="6">
  <navLabel>
    <text>Breakfasts Plain and Fancy</text>
  </navLabel>
  <content src="CastIronCuisine-6.xhtml#toc-anchor"/>
  <navPoint id="navpoint-6" playOrder="7">
    <navLabel>
      <text>Apple Fingers</text>
    </navLabel>
    <content src="CastIronCuisine-6.xhtml#toc-anchor-1"/>
  </navPoint>
  <navPoint id="navpoint-7" playOrder="8">
    <navLabel>
      <text>Hummelgum</text>
    </navLabel>
    <content src="CastIronCuisine-6.xhtml#toc-anchor-2"/>
  </navPoint>
  <navPoint id="navpoint-8" playOrder="9">
    <navLabel>
      <text>Breakfast Lasagna</text>
    </navLabel>
    <content src="CastIronCuisine-6.xhtml#toc-anchor-3"/>
  </navPoint>
</navPoint>