Maybe I just drank the Kool-Aid on Roths, but I have always lusted to get as much as possible into Roths in order to have them be outside the tax system for my lifetime and my kids' if I can pass it on to them.
Since you can only get money into an IRA or Roth if you have earned income then your working years aret the time to do it. Now it's too late for me in ER.
Non-Roth IRAs (Sep or regular op 401k) are like holding tanks. You can get the money converted into a Roth sometime in the future. Since the future for anyone contemplating ER means that time is not too far away, this is not all just far-off theory. You will have a time soon, in ER, where you can make the conversions at 10% and 15% tax brackets. I've been doing it bit by bit for some years now.
It's sort of like backgammon -- moving the pieces down the board, when the rolls make it safe.
So deductible or not, I'd say get the $ into an IRA, and move it to Roth later when you can.
One final thought: get one of those calculators and notice how big your IRA is likely to be by age 80, and what your RMDs are likely to be. You'll be in the max tax bracket for sure, with those kinds of deductions. Because of all the compounding inside the IRA this is going to be huge. Get it into the Roth in your 40s or 50s and all the growth and compounding in the subsequent years is all taxfree.
Here is a calculator about the size of RMDs that might open your eyes as to how big they could get:
http://www.hughchou.org/calc/mdib.cgi
Jarhead, I am not sure if it uses the 16 or 26 method -- would you be able to tell if you looked at it? It was updated in 2002-- maybe RMDs are not so bad now?