Peter...I did the same research you did and I think that section was listed under:

the following provision is operative for Hawaii income tax purposes.

You might want to look at it again, just to be sure.

Have you heard anything about Hawaii Legislature adopting the Federal exemption of 10,200 for the UI payments?  I don't want to file Hawaii returns until I know for sure that they are not going to adopt the Federal rule on UI taxing.