[Nexus 7 Original Development] RealPariah:
Looks like I figured it out.

Here are some oddities...

First, it appears TWRP is handling wiping of data wrong in some way. I did not have time to locate and weed through logs while I was barely functioning [had to factory wipe just to be able to access internal storage via the computer]. I say TWRP has the issue due to I tried a million ways [upgrade from 2.54 [paranoid] booted to optimizing apps and froze at starting apps, restart and boot loop at logo. Factory image, TWRP, wiped everything flashed both with and without gapps and nothing would get me past boot loop at boot logo.

Finally, I just threw my hands up and said it has to be either the boot loader [due to postings of others with issues] or the Recovery [which TWRP itself was reflashed multiple times with multiple versions all of which would boot, but after flashing ROM Zip would boot loop on logo].

I tried 3 - 4 versions of bootloader with mixed success [3.35 occasionally boots with no video so be aware of that [still just hold power in for 10 secs with vol keys both in and once it registers as fastboot on computer flash newer version]. The newest loader was not acting any kind of weird though I could get the factory flash of 4.2 to boot, I could use the All-in-one tool [Nexus Toolkit] to root via the bootloader on the newest version so that was not at issue.

Finally I just swapped TWRP for CWM [right now back on 6.0.1.0 Touch] and when I went in to mounts and storage and wiped /system and /data there and flashed both the ROM and the Gapps the whole thing worked! I did not get a 0 folder replicating my SDCard contents either.

Only issue, even though I installed Gapps at same time I flashed the ROM and was sure to wipe everything first when I went to log-in after skipping the intial setup wizard via the market it kept FCing. I then went to accounts and same thing market kept crashing and then a second gapp did as well. So I went back to recovery cleared the cache and dalvick cache yet again and ran fix permissions [in advanced], and restarted everything is back up and running just fine :) Now Gapps did not start to FC or show issues until I added a second DEVICE account NOT a second google account to my tablet so that prolly has some bearing on it, but restarting to Recovery and wiping cache, dalvick cache and fixing perms and restarting fixed that right up!

I love TWRP GUI and the multi zip flash, but time and again I find these weird nagging errors [I also find it weird devs for TWRP swear the way the new data partition works you cant just wipe contents of /data without wiping the contents of what is labeled internal storage [aka /SDCard] yet in CWM I can go to mounts and storage and tap wipe /data and it does just that and does not mess with my internal storage.

So even though TWRP's presentation and a couple tiny additional features are awesome, I myself have to side with function over form and will be reverting to CWM as that has never caused me any issues on my devices and at the end of the day that's what I require [IMHO].

I LOVE Paranoid Android and if there is any testing or otherwise [web page, storage, etc.] that I can help with please I am at your full disposal and my Nexus tablet is not my phone so more than happy to do just about any testing asked of me :)