Here is the fix:
1. Shut down Mail. Next, deselect "iCloud Mail" in the iCloud preferences pane in System Preferences FIRST. If not, it will automatically pre-populate the wrong p9X.mail.me.com server names again overwriting all your work.
2. Now restart Mail and go to preferences. If "iCloud" mail is still showing, select it and click on the "-" at the bottom to remove it.
3. Now follow the instructions here: http://www.wilmut.webspace.virginmedia.com/notes/icloudmail.html (disregard that this is for Snow Leopard, it DOES work on Lion) paying attention to the use of the "option" key when needed to avoid Mail automatically "creating" the account and closing out the preferences window.
4. Ensure the correct server names of "imap.mail.me.com and smtp.mail.me.com" are still there and close Mail preferences and now select "get mail". It may prompt one last time for your iCloud password, enter it and you are done.
Good Luck.