Basically it's going to be for a glossary. It'll be a food-related one with a lot of terms related to a particular kind of ethnic food and there'll be enough terms (and therefore numerous DT/DD pairs) that breaking it down would be very helpful but at the same time it only needs to be contained within one DL element and it'd be great to be able to use the listnav plugin for this job.
I guess I want it to look most like your demo #1 but instead of the list items actually linking to something they would just have their definition "definition" below them and then the next definition term is after that. I can take care of the styling. Let me know if you need more info. And thanks in advance for any help. BTW, I like that you know that it's okay to capitalize mention of X/ HTML elements when they are not within an XHTML document.