Oops, you are right. For some reason I thought using the If-None-Match header was the "right" way of doing this, it just adds flexibility to how you cache stuff.
"If you're not taking advantage of the flexible validation model that ETags provide, it's better to just remove the ETag altogether. The Last-Modified header validates based on the component's timestamp. And removing the ETag reduces the size of the HTTP headers in both the response and subsequent requests."
http://developer.yahoo.com/performance/rules.html#etags
"If you're not taking advantage of the flexible validation model that ETags provide, it's better to just remove the ETag altogether. The Last-Modified header validates based on the component's timestamp. And removing the ETag reduces the size of the HTTP headers in both the response and subsequent requests."