Teresa,
Great to hear that Chi Running has been so inspirational and is working for you. I'm currently dabbling with the techniques myself - trying to "unlearn" bad habits and start off with a clean slate (and hopefully actually start to enjoy running, rather than hate it).
Your post was really relevant for me - I bought a treadmill about a month ago and am now starting to think about incorporating outside runs (despite the weather) into my program, as I'm hoping to complete a half marathon at the end of next year and realise that I need to make the transition between the treadmill and the outdoors.
I currently have the incline on the treadmill set at 2%, as I've heard that's a more realistic replica of running on the road.
Keep us posted about your progress as I'm interested to hear how you're progressing.