Hank, you seem to have it all sorted. hope this provides a little more clarity:

The config line tell the pic how to get its clock ie: internal osc, crystal on XX pin etc.

Define osc tells PBP what speed to use for calculating stuff like baud rate and pause

OSSCON tells the pic what speed to run at from all the choices it provides. and yes, it defaults to 500K. I just figured this out yesterday with a 16F1947.