That is a correct explanation Jim, I'm going to quote you with a little addendum, hoping for a little more clarity.
"Basically use the metal size for determining the spacing but use a peg (within its allowable design limits) for the actual fastener."
That was presented during the enginering pre-con in Roanoke, I think it was part of Dick Schmidt's presentation. I've heard it from another engineer as well.
The metal connection spacing rules are in Section 11.5 in the NDS. The commentary is available online;
http://www.awc.org/Standards/nds.html 
