Further tests and research indicated that users performing the unlock should not upgrade to 1.1.3 from within iTunes. Instead, the 1.1.3 upgrade package from the iPhone Dev Team should be used, say developers.
The unlock survives this upgrade process according to our tests: the upgrade can be done through a variety of methods outside of the iTunes interface. Although it has not been tested by BetaNews, phones that ship with 1.1.3 installed are apparently also able to use this method directly according to web reports.
Problems with the process seem minimal. After the upgrade to 1.1.3, all features continued to work, save for the new location feature in the maps, and the Installer application and any previously installed applications disappeared from the home screen on our test phone. However, this is related to the jailbreak itself, and not the unlock.
Since our initial report, at least one group has managed to include Hotz's unlock code into a basic application which handles all the programming without user interaction, as is shown in this guide from iClarified.