Thanks Ray and sorry if my post sounded snippy.
I got everything back to where it was was and backed up my entire directory to an outside directory and started over with the CMS process. As expected I got the same results.
I think it would be a good idea to either append ALL of the created files in those folders: images, css and js with "cms_" or put them in their own directory. It overwrites more than just style.css and admin.css although I have not compared every file yet. I know offhand it overwrote my logo.png file.
The other thing that happens that I am unsure if this is expected behavior or not is that if you click OK to put the files, it will create the WA_xxxxx directories and files but does not put them on the server. It does copy ALL of the contents of these existing folders though, Connections, css, images and js.
While I am not that concerned about it not copying over the WA_xxxx stuff as I can do that manually, what I don't like is that it arbitrarily copies over files that it should not. I know that this is tied to the first issue and should be addressed in the next release/patch as you stated.
In the meantime I will try the manual method and see what happens. Just wanted to bring this to your attention in case you were not aware.