I did check the readme and the blog post you listed. That is where I guess I am not sure where I am missing it.
1&1 allows for the following options when pointing a domain name someplace:
* assign to a directory (this is what is done for the main site, site1 from example above, /domains/site1.com as an example)
* forward the domain via frame redirect
* forward the domain via http redirect
Additionally in the DNS control portion these are hosted on 1&1 domain servers and registered with 1&1.
* Domain Data: General settings either via DNS or CNAME, I currently have site1.com and site2.com set to DNS and have the mail forwarding off to a google apps account
* Advanced DNS Settings:
* IP A record and MX records