All, I tried Mark Post's recommendation that I CMS format the volume but skip the CMS reserve, and that did in fact allow me to install a new instance. As a matter of fact, I have tried this a few times to make sure that the first time was not a fluke, and apparently the CMS reserve step needs to be skipped if installing to PAV enabled DASD. If there are detailed instructions for actually making use of PAV with LVM in SLES8, I would still be interested in seeing those. I can even offer my services as a guinea pig if someone needs to test with our specific hardware/software combination.
Thanks everyone for your help! Jim