Thanks for the original post Peter - I've also succeeded in getting the Mini upgraded with your instructions.
However, since alot of us are probably only now finding a reason to upgrade the CPU on the mini since it runs snow leopard fine, and since we're by definition going to be using a newer / faster MAC to install Lion with, I might suggest the following to possibly save time (plus I don't have a firewire cable), as well as be simpler for those of us who'd rather turn a screw than deal with the command lines and drive cloning (especially us Windows Expatriots) as I think this method would also work for a fresh install rather than upgrade if desired if you wipe the mini's drive before doing this:
So my premise is that we're going to have the mini apart anyway for CPU upgrade, and since it takes literally a minute to get the hard drive out of a macbook: (remove battery, remove 3 screws from the shiny metal lining inside the battery compartment and pull on the little plastic tab and out she comes, just have to remove the drive from it's retention bracket - don't worry about buying some torx bit you'll never use again, just carefully loosen the retaining torx screws on the bracket with needlenose then a little flat screwdriver will spin them out just fine. It takes even less time to get the drive out of the mini once you have it apart to change the CPU since it's just 4 "regular" screws to pop it out) You do have to carefully pull the foam off the top of the drive, but that's easy if you're gentle and it should readhere when you're done (not mission critical anyway).
So anyway, I just popped the mini hard drive into the macbook. Like your way, there's no drive cloning needed etc., just boot up and install -- and no chance to screw things up on the macbook's drive that way either for us Mac noobs. More importantly, you can peruse the Lion install a bit before removing the drive and ensure all is well before reassembly of the mini, thus knowing job's done before you replace everything.
So about 5 minutes to swap hard drives and about 30 minutes for Lion to install on the mini's hard drive while it "borrowed" my 2.2GHz C2D macbook (presumably less time for those with newer hardware) and Voilla, edit the filename as you instructed, and pop the hard drive back in the Mini and Bob's your Uncle... I'm not sure how long it takes with firewire, maybe not much longer, but I bet with the newer macbooks it would make short work of the install.
Like you I should mention that in my case is that I had a clean and tidy version of Snow Leopard I wanted to upgrade on the mini rather than a clean install, But I don't see why it wouldn't work just the same (and maybe even faster) with a wiped hard drive if you want a clean install.
Best of luck folks, always feels good to defeat Jobs' efforts to make me buy his latest toys, though I'm digging the low cost of these incremental OS upgrades and allowing us to use it on all our apple products -- wish Microsoft would take some ques from that. But must admit it Irks me that they've got the price of the USB version of Lion so ridiculously high. Also kind of perturbed that Airdrop doesn't want to work on the old stuff - the reason certainly isn't hardware related... But since I have Mobile Me I'm rather interested to see how smoothly iCloud works.
I'd have even splurged for a new mini, but once again they blew it with the optioning and price points. They keep forgetting the mini is supposed to be their entry level device...