Three questions:

1) I believe the outcome is the most logical, but why doesn't the documentation make mention of the fact the identity will march on irregardless of any identity_insert?

http://msdn.microsoft.com/en-us/library/ms186775%28SQL.90%29.aspx

http://msdn.microsoft.com/en-us/library/ms188059.aspx

2) For #Temp1 why was the inital value set to -2147483648, such a crazy large (small) number? Wouldn't -8 have sufficed?

3) Do the temporary tables really need to be dropped? Don't they just disappear when the session ends?

Thanks for the learning opportunity!