Many thanks to all who responded on my questions with ssh. I hope to make time next week to go back and do some re-checking on all of the things that were mentioned.
On using Protocol 1, it is only because I have two slightly different flavors, and Protocol 1 worked where 2 would not. Don't know, may just be come conf settings that need to be adjusted. As to the "USS does not support this convention (//)", that came right out of the z/OS Unix Systems Services manual. Mark indicated he could mkdir //.ssh on his z/OS 1.2, and that's what I am running., and yes I can also mkdir //.ssh. I'm using zFS structures, and have tried as both root and normal user, even ensuring a R/W zFS is mouted to the $HOME directory. Yet I still get "Failed to add the host to the list of known hosts (//.ssh/known_hosts)." Is anyone else out there actually using OpenSSH between Linux and z/OS? Probably a user error "Replace user and press any key to continue"! I'll see if I can figure this out next week. Thanks for all the help! Paul