Paused downloads restart from the beginning.
I've observed this by keeping a Finder window open to the Download directory -- as soon as I pause in iTunes, the download disappears in Finder.
iMac G5, Mac OS X (10.4.10)
Apple Event: May 7th at 7 am PT
iMac G5, Mac OS X (10.4.10)
Paused downloads restart from the beginning.