...OK, I re-read what I wrote and remembered what it was all about.
So, if you follow the instructions step by step exactly as stated, they will work fine. Now ...the reasoning that goes behind the instructions (and should likely be added to the errata and manual to help clarify):
1. Initial fit of the blank to the boat: The goal here is to mark and cut the shape of the sheer deck along the bottom edge of the cuddy side panel, tuning as necessary for a good fit inside the cuddy. A secondary goal in this step is to mark the location of the aft cuddy bulkhead (you don't cut this line) and the location of the forward cuddy bulkhead (you do cut this line ..later)
2. Once cut and fit back onto the boat, the procedure where you drill through the side panel blank at the top of the aft and forward cuddy bulkheads is to produce a tight little hold that a finishing nail can be stuck into. Normally, you'd expect to draw a line (with a batten) from nail to nail to mark the top cut-off line of the side panel ...but I have you draw one at about 1-1/2" high instead, and then you trim the top of the blank off along this line. The only reason for doing this is so that when you have a reasonably stiff batten once again clamped from nail to nail, the shape of the panel is far closer to the finished shape and will bend much more like the finished cuddy side panel should. With the excess wood still on the blank, it will not bend exactly the same and that's what we're trying to avoid. So, to make a long story short, you first make the cuddy side panel 'close' to what it will be, then you use a batten (reasonably stiff... like 1/2" thick or so) that both describes the final cut-off line and also forces the top edge of the cuddy side panel to take on it's final shape. Note that you will also be permanently installing a strip of wood along the inside/top of the cuddy side panel to permanently hold this shape ...read the section on installing the cuddy roof and you'll see. I think I said 3/4" square for that piece, but if I recall, I ended up going with something more like 1/2" thick by about 1" tall. You can experiment a bit since the type of wood that you use for both this strip and for the plywood of the side panel will affect the curve a bit ...do what you need to to produce a fair curve.
Hopefully this clarifies things, but if not ...keep asking. I'll draw pix if I have to...
Brian