I was able to remotely debug this problem with Justin's help and found the location of and solutions to some of the bugs that were causing these problems.

I would like to contribute the bug fix back to the community.

The best way is to attach a patch to this issue. That's the way other developers get to know your work. If you keep posting good quality patches devs will eventually give you commit access (in the OS community commit access is a matter of building trust).

Patch against 1.7.3a version of Geoserver.

I saw that the code was written to replace or save a coverage based on the fact that a coverage store existed before or not.

I have modified the code so that coverages are updated and the catalog is properly kept in sync.

Please verify.

Thanks for the patch Ronak, I modified a bit before committing but the end result should be the same. If you could update your checkout of 1.7.x and try it out that would be much appreciated.

I'm currently attending JavaOne so I will get to this next week.

Do you have any idea when Geoserver 1.7.5 will be released?

Will these patches be carried over to Geoserver 2.x??

1.7.5 should be out next week some time. And yes, these patches will be ported to 2.x. Have fun at JavaOne!