Hi Kevin, this is great. Here's a link to a PDF of the article I wrote in the British Ecological Society journal http://post.queensu.ca/~groganp/Hypotheses%20in%20Ecology2foradobe.pdf. Figure 1 in particular may help in making more clear what I mean by iterative, and how one cycle feeds into other larger cycles that ultimately yields a product - a published piece of new knowledge (that could I think be derived from 'observational' or 'exploratory' research as you put it)...and ultimately that new knowledge leads to further new hypotheses.
Cheers, Paul Paul Grogan Plant and Ecosystem Ecologist Dept. of Biology, Queen's University, Kingston, Ontario K7L 3N6, Canada. Phone: (613) 533 6152. Fax: (613) 533 6617. http://post.queensu.ca/~groganp/