I did a sysnopsis of a gnomon video for somebody at 3dbuzz a while ago. Might help:
OK, I watched that video again and took some notes. I'll try and summarize what I saw.
On the video he was working on a simple subd character. He duplicated the subd and converted to polys... level 0...tess method - vertices. He cut the poly geometry in to 7 pieces... head, feet, hands, torsos. You cut the geometry up where you will have a minimum amount of deformation, so for the feet cut it above the ankles, for the hands about mid forearm, for the head below the collarbone. He does these cuts for performance reasons as well as the fact that there's a vertex limit on wrap deformers.
After you do all the extractions, maya will leave you with some funky hierarchies, so you should select all the cut up polys - unparent - delete the null group node- and then re-group.
Then your basically going to select groups of vertices in you subd and assign the appropriate poly geometry to them as wrap deformers. Always check "limit influence area". Set max distance to the lowest possible - .01. After you assign the wrap, you can test it by moving them and making sure your highres subd moves with it. If "spikes" are getting left behind, up the max influence in the channel box.
The wrap deformers calculate in the order that they were created, so you might want to do the head first if your going to do a lot of facial animation. This will help performance.
After you assign all the wraps, as a final test, translate them all and make sure your high res is moving with them correctly. Tweak the max distance if they are not.
Another issue is scaling. It seems them after you assign a wrap deformer, if you need to scale the wrap it will tweak your subd in weird ways. He describes this behavior as a bug in the software. You can fix this by changing the influence type, but then you'll also have to adjust the max distance to compensate. Basically, it seems like you should scale your character before you rig.
Finally, he recommends you skin the entire group of low res geometry to the skeleton, so you can mirror weights later on. Skin with - closest joint, max inluence of 3.
Hope all this helps. I want to stress that I haven't actually done this myself, so I may have left some things out. I should be skinning in a week or 2, so get back to me on how this works out for you.
BTW, the video was Skinning 1, not Kinematics