Well I gave up on out of the box and came up with the script below to create fishnets. I am hoping to keep this as an iterative model where this script is passed the current %n% value from the model. Can anyone suggest how/if it is possible to pass the %n% value into a script using sys.argv[]? Using 9.2. Thanks.
# Import system modules
import sys, string, os, arcgisscripting
# Create the geoprocessor object
gp = arcgisscripting.create()
gp.overwriteOutput = 1
# Set workspace
gp.Workspace = "C:/CollapseTestModel.gdb"
myNet = "C:/CollapseTestModel.gdb/Net03"
myTemplate = "C:/CollapseTestModel.gdb/SelectBody__0"
dsc=gp.describe(myTemplate)
extents = dsc.Extent
print extent
gp.CreateFishnet_management(myNet,extents[0:17] + " " + extents[18:34],extents[0:17] + " 53", 0.000045, 0.000045, 50, 50, "#", "NO_LABELS", myTemplate)
print gp.GetMessages()