I found this helpful thread that I somehow missed the first time:
http://www.esp8266.com/viewtopic.php?f=26&t=2245It describes how the Arduino IDE will overwrite any firmware already loaded. Doh! But that is a good thing if you want to use the Arduino IDE anyway.
I also experienced a failure to communicate with the Arduino 1.6.4 IDE and 8266 Generic board type on my ESP8266-07.
I am currently stuck at this point with communications, but have learned a little since then. I'll go back and give it a go.
I did use Termite at 74880 bps to watch the exchange on reboot of the module.
I received the following stream:
ets_main.c [00]
ets Jan 8 2013,rst cause:1, boot mode:(3,7)