I have a project configured (I think) to produce Universal binaries. The base SDK is set to 3.2 and the Deployment Target is set to 3.1. Target Device Family is iPhone/iPad and
So, the key seems to be that the "Architectures" setting be set to "Optimized (arm6 arm7)" in addition to the "Valid Architectures" setting being set to "armv6 armv7".
This allows it to compile with the 3.2 SDK and run on an iPhone running 3.1
The settings I have in my question, in addition to this above change, seems to be what's needed to configure the app for submission as a universal binary. I haven't done it yet, but I'm fairly confident.
Please correct me if I'm wrong.