The Panel step can begin as soon as you start the game before you even have the staff. So once you complete the crazy place step 1 you can go right to step 3.
On re reading it sounds like you are saying the same thing.....
BTW: there are 8 panels, the 8th starts in the correct location. if it is changed from its original setting the EE will not progress
Complete walk thru
i think the spark has to stop, i have upgraded the staff many times, but you may be right
oh another thing the spark plugs (i call em that) have to be done in order
1. 5th generator
4. 1st generator
5. 2nd generator
6. final spark plug behind the church entrance