So, the eagerly awaited step two of the instructions:
2. (August 2010): Add a piece 4x6" (finished size) to the left hand side of your starter square (if you prefer, you could add it to the right side - as long as your unit after step two is 10x6", it doesn't matter). This piece can either be pieced, a single piece of fabric, or really, what you like - just remember, some later steps will call for applique or embellishment, so you may want to leave some larger areas of unpieced fabric.
Here's what my block looks like now with step 1 and step 2:
And here's my virtual quilt's progress: