I run a project that uses web services (Joomdle, Joomla-Moodle integration), and passed the same issues you describe.
As for the need for inserting rows in the tables to make it work in 1.9, I finally did it in my install file, as it seemed mandatory.
Also, I recently made ported my extension to work with Moodle 2.0, and faced the same issues at you at first.
It turns out you cannot use the old mnet method anymore, but you need to move to the new web services architecture.
These links should get you started:
There is quite a lot of work to be done to port it, but it (almost) works perfectly for me.
Only issue I have is with UTF8, I will post a question about it now.