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<< 1) The approx $3,500 rolled over from my pension was indicated as 0.00 taxable on the 1099R. But when converted from the IRA Rollover to the Roth, it became taxable? >>

Right. It had never been taxed before it was distributed through the conversion to Roth. However, it still hasn't been taxed, because you recharacterized it back to the traditional IRA.

<< 2) As my income for 2000 will be less than $100,000, I would like to convert the $9,750 right back to the Roth. Will I have to pay tax on the $3,500 again? and on those ludicrously inflated "earnings" of $6,250 also? >>

You will pay tax on any amount you convert from traditional to Roth. As mentioned above, you haven't paid tax on any of it yet. (I'm assuming here that there were never any nondeductible contributions to your traditional IRA.)

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