That's all a bit complicated, pfotoguy369. I'm trying to get my head around it.
First off, I assume you're applying for an annual extension, not a visa (that you'll have from three years ago and it dosn't matter that it's expired. You're always extending from that original visa). Terminology, I know, but it's important.
To enter a country (almost any country) you should have six months validity left on your passport. If you get, for instance, a multi-entry Non O visa from somewhere outside of Thailand, I think that the issuing Thai Embassy or consulate will want to see a year's validity on your passport, plus 6 months.
But for an extension? I've heard of plenty of people who've had to get a renewal passport and then have the original visa (could be 5 years old by this stage) and the annual extension transferred to the new passport. Imm are happy to oblige as it's more money for them.
Where to renew? Certainly it's now the case that BKK have de-cenralised the whole Imm thing and most offices nationwide will insist that you apply at your local branch. This has been the case for about 6 months.
Following your post, you were lucky that Pattaya waived the 3 month rule regarding the 800k. The police order is pretty clear:
http://www.immigration.go.th/nov2004/2n ... p606EN.pdf
Section 7:21 is applicable to you. However, Imm officers do have discretion, so that worked in your favour.
The bit I don't understand is the back and forth from Pattaya to HH. Perhaps Imm are reluctant to extend for a full year on a temporary passport? That's all I can think of, so they time it to coincide with your old one. Strange. Can't really help you there, I'm afraid.
However, to be told to go back to Pattaya when your full passport comes sounds even stranger. You might end up having to to a fair bit of traveling. Hopefully, Pattaya will oblige again.
Definitely, good luck.