Ok well I figured it out finally. If you are a newbie and on a mac you might try this.
Download FTP app called transmit
Download the mobilecal app for iphone (the link is somewhere around here)
Make sure you have open ssh installed on your touch
Open Transmit and start a connection via SFTP (FTP did not work for me)
put in the ip address found on your touch in the network settings, then use root as the username and alpine as the password
this should connect you to the itouch (it takes a little while, at least for me)
You will open in root but you want to change directory to the / directory
Open applications and drag the iphone mobilecal into applications. You will be asked if you want to replace current file and click yes.
Done deal. I now can edit and add events and they sync back to ical. This process, once you have downloaded the necessary ftp app and iphone app will take you 2 or 3 minutes tops.
Also, keep in mind that while this worked for me, I am a novice so your mileage may vary.