What worked for my Droid was to use Rom Manager and install Clockwork recovery (at least 3 times), until it immediately said it was installed. Then it successfully rebooted into recovery.
I already had update.zip ready for install, that worked fine. Went to Sapphire 2.0.2 ! Wheee!
Then installed google apps update same way, but phone locked up on opening screen "Press Droid to Continue". So I went back to recovery and did factory wipe, rebooted and everything back to normal!
Then, just for fun, installed GO Launcher EX (as I was unsing LP), and wow...what a difference. Much more snappy with all the features I loved about LP.
Anyways, in case this helps anyone else...that's what I did to get back on board.