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Yes, that process will overwrite the iPhone version, since there's no way to run the script on the iPhone.

To use what's on the iPhone, you have to get it to sync somehow. It's possible that if you remove the OmniFocus data that's on MobileMe now. (Just move it to a new folder or something) that then the iPhone will be able to sync to MobileMe once without timing out, since it would just be pushing its own data and not trying to compare with existing data. Then copy that data down to your Mac and follow the instructions with the script.