I was Swypeless for a couple of weeks but got it running again a couple days ago.
First, to answer your question, no, swypeinstaller isn't the actual install file. It apparently goes out to the Swype site and downloads the install file.
Second, AFTER you have run swypeinstaller, waited for it to go out and get the actual install file, and have run the install file, at the very end you will be presented with a button that says "done."
Don't click that "done" button.
Instead, hit your BACK button. Hopefully when you do this you will see a message saying that it is "registering" your new installation and then you will be presented with screens allowing you to set your Swype preferences.
I read about this "back" vs. "done" thing in another thread and it worked for me on my device (Droid 1 running 2.2). Prior to learning of this back vs done issue I kept getting the same "not for your device" install error message you are getting.
Good luck. Your mileage may vary.