I tried the following:
1. gconftool -s -t string /system/osso/connectivity/IAP/DEFAULT/type DUMMY
"gives error "No value to set for key: 'DUMMY'
2. Ran ./btup
Error: bnep0 not available.

I'll keep trying. I must need to setup a network interface for bnep0? Seems like the script may not be setting it up properly.

Maybe I need to change this?

# real script follows
BTADDR='xx:xx:xx:xx:xx:xx'
IP=192.168.2.2
GW=192.168.2.1
NS=192.168.2.1
IFACE=bnep0