I think perhaps people are misunderstanding how the Custom Layout Update currently works. The way they have it now you can just add things to the current layout here and not completely change to a new one. You can add things such as callouts and main content. I would check out your layout .xml files for references on things you can change.
_win: Your problem is that you are trying to add a full template over itself here and that is why you are getting double display.
<block type="catalog/product_view" name="product.info" template="catalog/product/view.phtml.1"></block>
I’ll give a quick example for adding a custom callout to a specific page or category.
Put this in your Custom Layout Update under the needed category or product:
<block type="core/template" name="right.permanent.callout" template="callouts/mycustomcallout.phtml"/>
Then create a mycustomcallout.phtml file and add whatever content you want. You could even call a CMS static block in your .phtml template to be able to edit the callout from the backend.
You can do this for things other than callouts (again reference xml files for examples), but I find that this is one of the best ways to add quick info to a specific product or category.
You can completely change templates as well but not through the Custom Layout Update option as it stands now. You have to hard code as in fenixf‘s example. It seems to me that you should actually be able to accomplish this by doing something of this manner:
... or something similar, but I have not been able to get it to work fully through the Custom Layout Update option.
Hopefully they will come up with a better way of managing custom templates in future releases.