Victory to report, I think
I 'paid the price, and went into standard recovery mode (cmd-r on reboot). With my ISP it said it was going to take about 5 hours to download (would hate this if I had to do this all the time!).
Instead of installing to the regular internal disk, I pre-formatted a 16gb USB drive as macos, journaled. Select the partition tab, and make sure you are guid partition map. Double check partition.
After the download completes, it will reboot, so catch it before it reboots. After the download, as soon as reboot starts (screen goes black), I yanked out the USB, and hit power.
I then rebooted to normal hard disk. Now it gets murky, as I did a couple things. First I had to reset PRAM ( look in huge earl help ). Then I used the esd.dmh as source image to a 8gb USB ( I wanted to save what I created above ). I booted into recovery mode again (cmd-r). I did this ti get to disk utilities to reformat the internal disk. Took a big gulp when I did this. I then set startup disk to my USB, and rebooted. I may have had to reset PRAM again too.
The reboot worked. I selected install lion into internal disk. Away we went. Resetting pram, was key to get it to kind of getting it restarted in the right 'mode'.
I'll try reproducing. Ask questions.