Mod_rewrite failing to silently redirect
===

2 days of struggling and about a pound less of hair, I figure it's about time I ask for some help.  I've recently migrated my project to a main sub-directory so that the structure is as follows:

    -application/
       -index.php
       -signup/
          -index.php
          -signup_set.php
    -css/
    -js/

I've been trying to get mod_rewrite to do my work for me to exclude "application/" from all the urls.  Here is where I got in my root .htaccess:

    RewriteEngine On 
    
    #first round through, prepend 'application/' to request
    RewriteCond %{REQUEST_FILENAME} !-f
    RewriteCond %{REQUEST_FILENAME} !^application

    RewriteRule ^(.*)$ application/$1 [L]
    
    #second round through, if the new url is not directory or file, append .php
    RewriteCond %{REQUEST_FILENAME} !-d
    RewriteCond %{REQUEST_FILENAME} !-f

    RewriteRule ^(.*)$ $1.php [L] 

I may have a terrible understanding of regex/mod_rewrite, but this actually seems to partly work.  Partly.  The weird part about this is that when I route to a "pretty url" (e.g. www/signup) the url in the top bar is physically rewritten to include the "application/" (e.g. www/application/signup).  So somehow this "silent" rewriting process is getting pretty loud...Any suggestions?  I realize I could change my root directory but that would require rewriting of code referencing css/js files.  I'm more curious than anything, just trying my hand at some htaccess.  Any help would be appreciated!  Thanks StackOverflow, you rock.

P.S. I'm running Apache on Windows 7 and using a virtual host (in case any of that is relevant)