JD,
I've played a decent amount of short-handed limit O/8 on Party, and crazy loose play is the norm. I only played 2/4, but it was just like you described it. My only problem is that it's extremely high variance, and since I usually play above my bankroll, it makes high-variance games tough to play. The first weekend I played, I was up a grand and was winning like 14 BB/100 hands. I promptly went on a nice downswing and lost 60% of it back. A good lag could make a killing at the short handed games, I'm just not well equipped to handle the swings currently. My only peice of advice for SH play is, rather than trying to play tight, strive to play tighter than everyone else. If you're too tight, the blinds hit you too fast and you leave too much money on the table because often your marginal hands are still better than the total garbage the others are playing.
If you play on Stars, the short handed games there tend to generate more rake than the full ring games, and are only slightly tougher than Party, so they're excellent to clear bonus's with.
Drade