The way I understand it is just that you cycle through all of the modes over a single root note, just as you said James. And actually, the tapping portion in 'Satch Boogie' uses pitch axis theory, not Always With Me, Always With You. The tapping portion in that song is all in Ionian. In 'Satch Boogie', he spends a good 30 seconds cycling through various modes over A. But instead of just going through all the modes, I use it for an entire song structure. What Chris said is pretty complex and I think i understand it a little, but I use it differently. I'll start a song in a given mode, say D minor. Then I would swith back and forth between the parallel major and minor of D for different sections of the melody, and for the solo, like Satch often does, swith to a whole new tonality. I could use D phrygian, and all the relavtive modes such as C dorian and Bb major. I like to use pitch axis theory in such a way that its not very obvious. You can get some great sounds by discretely moving through it. But of course Satch Boogie is awesome.

Here's my little explanation....i should update it, in fact:

http://www.guitartricks.com/2000/trick.php?trick_id=1370