Dear Bassguy:
You will undoubtedly get a variety of advice on this thread and obviously none of us are in your exact shoes. Having said that, I can tell you without hesitation that if I was in your shoes I would make the same exact decision you are making, i.e. AS. JohnT has posted often on this forum with facts indicating that treatment success is the same for people who have been on AS and required treatment later as compared to people who treated first without AS. I would encourage you to go back and reveiw some of his posts on this or perhaps JT will drop in on this tread with those facts.
Oft quoted AS guidelines promote this approach for patients over 60 but newer thinking seems to avoid the age issue and focus on the diagnosis. The link below takes you to a presentation by noted PCa surgeon Peter Scardion wherein he makes the case for AS rather than surgery for low risk cancers such as what yours appears to be.
http://www.urotoday.com/media/presentations/auany2009/scardino_restaging_low_risk_prostate_cancer_10_27_2009/player.html
I think the real keys to successful AS, IMHO, are having the right mindset (which you appear to have), the right stats (which you have) and a doctor who is experienced in working with AS patients and will work with you on the proper follow up.
So...count this vote as one in TOTAL SUPPORT of your decison and I wish you the best.
Tudpock