I finally sat down to understand a recent post by lullabot on Drush 3 remote capabilities. Its taken me a couple of hours to set up, but this will save me hours in drupal updates. Thank you drush project! My hangs were on setting up the ssh key, which I omitted at first and then realized that it was a requirement for drush. The second hangup I had was to make sure my *.aliases.drushrc.php files were wrapped in <?php ?> tags. Hopefully that helps some one else. Here's an example of one of the connections I set up with my remote host.

$aliases['mysite.com'] = array(
  'uri' => 'mysite.com',
  'root' => '/path/to/drupal',
  'remote-host' => 'myhost.com',
  'remote-user' => 'ssh_username',
  'path-aliases' => array(
    '%drush' => '/path/to/drush/folder/on/server', // ~/drush
    '%drush-script' => '/path/to/drush/script/on/folder',  //~/drush/drush
  ), 
);