OK - I've tried that version. She creates the I this way.
As you've done, she cuts down the centre (that's the 2 1/8" line) from the 2 3/4 line to the 8 1/4 line.
Then she cuts along those 2 3/4 and 8 1/4 lines as far as the 1 1/16 and 3 3/16 lines.
After that she adds the glue, and folds the left side along the 2 3/4 line in to the centre, and folds the right side along the 8 1/4 line into the centre.
The mechanism will work more fluidly if you fold your scores before you glue.
This looks like the type someone sent me from a Christmas cracker using just one sheet, because she knew the way I had learnt it was with two sheets.
@Jadie -
http://www.paperscrapz.screentastic....20card%202.gif
That is more the way I learnt to do it, and you can vary the sizes at will. Really all that matters is that each side is divided into quarters - it will work with a square shape just as well as with a rectangle. I can't find my own working template - a whole load of stuff is missing on my desk :-).