Hello,
I was wondering if anyone had suggestions/instructions on how to create a source only
project within RTC2.0 such that all other RTC funtions/folders(Plans, Work Items, etc...)
are not only disabled, but are also removed and/or not viewable by users.
I really only want a trimmed down project that only uses the Source Control functionality.

I have a repository that has an existing project that is being used for Plans, Work Items, etc...
and want to compartmentalize code/components into separate individual projects(per RTC 2.0's
ability to manage access at the project level).

I can do exactly this as demonstrated by this Jazz library video:
http://jazz.net/library/video/54

However, I want to strip down the source project even more to remove the other
folders/function(Plans, Builds,WorkItems, Reports) that are not being used.
The ultimate goal, if this is possible, would be to create a process template based
on this to be used by all future source projects/compartments.

Doing something similar to you right now. If you create a new process template from scratch you get almost the most plain-vanilla project you can. In that project you can remove the timeline that is autocreated and then just assign permissions to "Everyone" to save components.

When you create a project from this template you then only need to change the access control on the project. Users would only have to connect to the source project area to add/remove components. Non-private project members won't even see the project anywhere. You do get some visual noise in the web UI project area list, and if you try to do actions there or in the Eclipse UI you'll get permission errors. But I think this gets you close to what you are looking for.

Now having given this advice, we haven't fully implemented it yet so I'm not quite sure what the implications are for streams as the blog post implies I should be changing ownership on streams to the private source code project. I'm not sure I understand why that is needed as I'm more on the administrative side and haven't been actively involved in source control usage.

Should have made it clear - all permissions are off by default in a new process template, so users won't be able to do anything other than save/modify components.