Thanks Chuck

Yes, this helps a lot and I followed your lead. I'm still getting the error, but I'm also still using the GC-RG1 receiver.
However, the reliability has improved dramatically after I did a few simple things. I would say it's 98% reliable now. Unless you point the remote in weird spots or don't depress the button all the way it works perfectly even 30 ft away! The xantec receiver is incredible compared to the GC RG1 (but costs a lot more). I can bounce ir signals off just about anything now and also get a good read!
1. I went and bought a xantech plasma ir receiver model 490-90 today. It came with a little connecting block (thank goodness) and was on clearance for $100. I have an LCD tv, but the plasma model was all the local place carried. It works great unless I stand and point it directly at the LCD. I can go off the side upto a 45 degree angle like the picture here shows:
2. I used a spare IR emitter, plugged into the output of the little connector block and glued this emitter to the front of the RG1.
This does the same thing as the gc-cxg1 in theory as it seperates the grounds to avoid any noise from ground loops.
I also wrapped alot of electrical tape around the RG1 and emitter combo so no sunlight etc could get through.
3. I bought a 12v power supply from radioshack (any should work above 20mA).
4. I hope Global Cache will be kind enough to exchange the RG1 for a CXG1 to cut down on cables.
PS: the support number at Global Cache is: 541-899-4800.
Here's what I'm doing with the GC-IRE:
On most any receiver remote you have a play, pause, stop etc buttons that work. I have written scripts in premise to force the play command to whichever device is connected to the selected input on the receiver when I press this play button on the receivers remote. In this way, the play button and etc can work with whatever device premise is hooked too as long as it is connected to the receiver and set up correctly in premise.
I think your setup sounds neat as it saves outputs on the GC-100-12 to use for other tasks such as power sensing. More versatile for sure!