I have an early Z1 that has never been bypassed (bought a circuit, but never wanted to mess with it). The freezing that I have been experiencing daily in Tucson finally convinced me to pull out the unit and install the update. I downloaded the update from Pioneer's website and burned it on a CD using Sonic. Pulled the unit, completed the two wire bypass, and installed the update. Got a "parking brake" error message when the Z1 cycled back. Completed a Level 1 reset, and voila... no problems and completely bypassed. I'm pretty damn happy, but will report back tomorrow after my car sits in 100 degree heat during the workday.
Remember: If you have a back-up camera, you will need to change the setting back to ON in system settings after the reset, or it will not be recognized