I did exactly what you are contemplating. I installed IWD, patched IWD, bought and installed HOW, THEN patched HOW and just recently installed TotLM. I haven't had ANY problems yet. I think the warning about the 1.06 patch is if you already have HOW installed - in that case installing the 1.06 version patch for IWD would be BAD, as it would mess up the override folders!
If you are worried in the least about installing HOW over a patched version of IWD, you can always do this. Copy over your saved games to a temporary folder, uninstall your patched IWD. Reinstall IWD and then install HOW over IWD, and THEN apply the HOW patch. Then copy your saved games back into the saved game folder.
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