Thanks to everyone for their information. My plan is to stay in the Kathmandu Valley and take one of the 1 hour flights to Mt.Everest as suggested by stilltrekkin.
As for the Visa issue, I just wrote the embassy to ask what the official policy is. When they write back I will post it here in the thread. I REALLY hope this doesn't cause me to cancel my plans to Nepal...surely there are other people who did what I want to do...
The following is a link to a very recent thread on the India section:
http://www.lonelyplanet.com/thorntree/thread.jspa?threadID=1891856
Not good news by the look of it.
I agree with Lee - it is looking difficult.
This link is to VFS Global (for UK visa applicants) but should still be relevant to US applicants. Scroll down to "Tourist Visa advisory" - which states the permission for re-entry should be sought in the UK - it seems therefore permission cannot now be sought in KTM. I have read that people have got permission in Sri Lanka and Nepal so this could be a rule change.
Here is the link to the Travisa page (scroll down to "Tourist" where, at number 6, an explanation of sorts is given.
I hope it works out for you.
my correspondance to travisa here in the USA:
"Hi,
I have received my passport back from you with my 6 month India Tourist Visa. My flights are purchased and I visiting India in May. My plan is to visit Nepal as well for 4-5 days during my 3 week trip. My visa says it is a multiple entry visa, so I want to just make sure that there is no problem for me to travel from Delhi into Nepal and then re-enter India after those 4-5 days on my way to Varanasi. Perhaps a silly question because it does state "multiple entry", but I have read some conflicting things online regarding a "2 month" rule between visits and just want to be sure.
Thank you!"
and their response:
"Dear Sir,
This is o.k as long as you hold an itinerary to show customs. You will not need a re-entry permit if you have proof its part of your trip. I am copying and pasting the re-entry exemption rule.
There should be a gap of at least 2 months between two separate visits to India on a Tourist Visa. For Tourist Visa holders who wish to visit India within 2 months of their last visit, an application for a Permit to Re-enter India is necessary. No Permit is needed if the visa holder is traveling to multiple countries on the same itinerary and the trip follows the itinerary exactly. The visa holder must carry a copy of the itinerary to show the Immigration Officer.
Thank You,"