I think ad-hoc is for computer to computer wifi networks. I can see two reasons for needing it:
1. You need to convince Maemo that you have a working connection, which would be difficult without a valid wifi connection.
2. When using the bluetooth pan startup script, it will cause an existing wifi connection to be dropped. It seems like ad-hoc connectiosn get around this.

That being said, now that I have access again, I think my instructions need to be revised a bit:

1. Start the PAN app on the phone.
2. Connect to the 'PAN Dummy' ad-hoc network.
3. Run bt-pan.sh. Everything should work at this point.
4. Run wlan-down.sh. I believe this reduces power consumption associated with the ad-hoc network.

I can dump this on a wiki page if a few other people confirm that it works.