Viable Solution - extra mouse
Another person mentioned this before -- but after DAYS of head-scratching, and trying the PRAM zap and all the other things -- here's a recipe that I think will work for most people in this cul-de-sac of Parallels land.
1 - PLUG IN ANOTHER USB MOUSE, or use your fancy Bluetooth mouse that proves you're really cool already

No second mouse, no love. As long as it's recognized by MacOSX, this method SHOULD work (ymmv).
2 - when you start your fancy new Bootcamp VM, it's all about what you do BEFORE you click into the window.
3 - down in the lower right of your VM window (get out of coherence or full screen if you're in that mode) you'll see icons for all your Mac resources (hard drive, virtual floppy, etc.)
4 - Roll over (do not click) the icons until you find the USB icon (it looks like a trident, or an upside down squid), once found -- click on USB, a new menu appears.
5 - Read that menu closely. You'll see the entry Apple Internal Keyboard / Trackpad, probably IR receiver, and (hopefully) something vaguely referencing the other mouse (Parallels Team, better descriptions please). For example, my bluetooth mouse is called "Apple Wireless".
6 - Click Apple Internal Keyboard / Trackpad ONCE, this indicates to your VM that your laptop keyboard and trackpad are going to be the input devices for this session.
7 - USING YOUR TRACKPAD, click once on the VM window -- wait a second or two, and now your trackpad SHOULD be moving the white mouse inside your VM window. If it isn't, try hitting CTRL+ALT to escape out and do it again -- if all else fails, reboot Parallels and try again.
8 - Ok, here's the magic (if you have to login, don't worry, we'll get there in a second). Now reach for your bluetooth or USB mouse. Is it moving the BLACK mouse arrow? The one that goes with MacOSX? If the trackpad is moving the WHITE mouse inside Parallels, and the other mouse is moving the BLACK mouse outside Parallels, you've made it -- we're gonna land this plane. If not, flail around until you create that situation (sorry, that's about as far as I can get you

)
9 - NOW -- if you have to login, go ahead and login, using the internal keyboard and TRACKPAD. If you're already at the desktop, go to step 10
10 - Once the desktop appears and stops chewing on startup items, IMMEDIATELY go to the "OTHER" mouse, the one that moves the BLACK arrow, go up to the ACTIONS menu of Parallels, and select "Install Parallels Tools..."
11 - During installation inside your VM, you will be prompted for stuff -- use the TRACKPAD and WHITE mouse arrow to select the standard "yes/continue" buttons"
12 - When prompted, restart your VM.
Once this is complete and you've restarted your VM, your mouse, trackpad, keyboard and other doodads should all be working correctly -- the proper effect is that, when you move the mouse cursor over the VM, it becomes "white" automagically, but when you move it off the VM, poof it's black again.
If you've reached this point, shudder -- slump your shoulders -- and weep in frustrated joy that the pain is finally over. You will never have to do that hand-over-hand cliff-face leap again on this VM.
Welcome to the Bootcamp as Parallels experience.
PS - I know this should go without saying, but please don't attempt these steps with another VM window running at that same time.