Ok gents, after 11 months of the bike being in the shop, she is finally back in my garage. I had turned in my license plate, cancelled the insurance, and prepared for selling her for parts. A friend of mine works at the dealership and spent his own time after work diagnosing and fixing it. Where I left off, the Kawi rep went through the bike, and his final diagnosis is that I had replacement keyfobs "from eBay" that set the computers off. For reference, my fobs are the ones that came with the bike when I bought it off the showroom floor in May of 08.
My friend determined that the computer that controls the KIPASS system wasn't getting 5 volts required to power on from where ever that signal comes from. It therefore couldn't communicate with the ECU. He tried to supply the 5 volts from another source, and that made that computer live, but it still wouldn't communicate. They had that computer from another wrecked bike and plugged it in with a programmed fob. No dice, same subkey id errors.
So, he found an auction on eBay that had all of the c14 computers, KIPASS ignition, fobs and all, for just south of $800. He replaced all of the bike's computers, reprogrammed the fobs, and voila! She now runs!
Could more diagnosing been done? Could something have been overlooked? Possibly. But with as much time as he put into the bike, it wasn't going to be worth much more. I paid for the parts, the shop fees, and him for his personal time.
In closing, I cannot give you an exact explanation of what was wrong, because we will never know. The important part is the bike is now back on the road (metaphorically, since there's no insurance) and should last awhile. The downside is I had to give up my flashed Steve's ECU.
As usual, thank you to all of those that offered their input and technical knowledge in helping to sort this one out. I'm still busy at work and not on here nearly as often, but my fondness for you is still there!