Ok, just to make this a little easier for everyone I figured I would do a video of how to root a stock Donut phone from beginning to end (all the steps are already on the site but I figured I would put them together in one post to make life easy).
I. Get Back to Cupcake
Most of the procedures entail either putting the IMG.nbh file on the sd card and booting into bootloader and flashing it OR connecting the phone via HTC Sync to the computer and running an RUU to get back.
II. Root The Cupcake Phone with One Click Procedure
All of the 1 click rooting procedures are putting the Flashrec.apk file and a recovery image on the SD card, installing Flashrec and then using it to flash the new recovery image. You WILL NOT have internal root access after this procedure (it only allows us external root access from recovery) so you MUST goto the next section to finish.
III. Load a Custom ROM
All of these procedures consist of partitioning the SD card then putting a ROM on the SD card and then loading the ROM. In the case of the G1, you also have to update the radio and SPL (if you do not have the current version, if you do then do NOT load them again).