1. We have a nice manual describing the exact procedure. Please read it first as the forum guidelines require you to do so.
2. I really don't know about what "horror" stories you read about but Ipods are almost unbrickable -- there's always a way to fix it.
3. your instructions miss 3b) reboot the Ipod. The manual holds this information ...
And we have an even easier way by using
Rockbox Utility which is still in development but already works really nice for most users.