I recently got to hook up my RE-400 with my O2 after doing the microfiber cloth mod, and damn does it impress. I felt that the mod made the mids and highs smoother, while taming the midbass a bit. Instead of having punchy bass, it feels "thumpy" (imagine a bare fist vs. a gloved fist punching you). I might've lost some bass texture and ironically got more treble presence - this does not sound like the description of the RE-600 that I'm reading. I suspect this is because my microfiber cloth was on the thick side (compared to traditional soft microfiber cloth), so the results may not be the same for everyone.
On a side note, the RE-400 really loves power: the difference between a Sansa Clip+ and an O2'ed computer (no soundcard or DAC) is appreciable.
EDIT: I would not hesitate to call my modded RE-400 a fusion of the RE-ZERO and the RE-262 (RE-ZERO highs/amount of detail, 262-ish midrange, 262-ish bass). Yes, the bass sounds like the "wet cardboard" 262 bass that another Head-fi member so described .
Try an eyeglass microfiber cloth. You can get them at Walmart for $1.50 or so. All the things you describe are true, except my bass has more weight, punch and more impact than stock. I like it a whole lot better.