You are so close, it was a term that AA at times wished he had never said and at workshops and lectures would try to put to rest. The concept in his mind was to think in terms of the final print and work backwards.
As to the zone system (small z) both he and Fred Archer worked on this at Art Center school of design (not college yet). They used the concept to help students to see in tones of gray. So when looking at print for a crit you could say that that value needs to come up or down by so-much. It gave the student a place to start from (middle gray or middle 'C') we all have a starting point. No dark robes, no secret chants, no waving of pyro fumes over the negatives just a starting point thats all it is.
Ditto what Aggie said! Thanks Jan for the insight. Its always amazing how the legends and myths grow so large and wild.