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These two statements seem to contradict each other.

• Page 2, At the end of each session: The adventurers take an extended rest.
• Page 4, No Extended Rests: They’re assumed to take an extended rests between each pair of sessions.

So which is it? Do the PCs get everything back after each week or do they only get the benefits of an extended rest after every other week. What this really comes down to is how often they can use daily powers. Looking at the way the adventure is structured there are some weeks (like session 1) that will have very little combat. So pairing session 1 & 2 together before allowing an extended rest doesn’t seem like a huge hardship.

My instinct is that the intent of the rules variations they’re encouraging for this season is to do extended rests after each even numbered session. I’m also inclined to award milestones after each even numbered session as well, thereby giving the PCs 1 action point every other week (like they’re used to with Encounters). 

How are other DMs handling extended rests?

I'm going with every session.

I haven't decided either way, yet... But the first answer, to play devil's advocate, that leaps to mind is, "Verisimilitude?"

If I can add something here, I think the reason to do anything with the game rules--whether you are talking about D&D or Monopoly or poker or whatever--is to add fun for the participants. With D&D there is an added element of complexity to the issue because different players have fun in different, and often diametrically opposed, ways. I cannot speak for WotC, because I am only a freelancer who works on adventures. But from what I saw and heard from people playing D&D Encounters was that there was getting to be a little bit of burn-out from players who saw just combat after combat after combat after combat from session to session and from season to season.

Understand, there is nothing wrong with playing D&D as a cooperative tactical skirmish game with a thin veneer of story overlaying it. However, it was time to point out to the people who had only been shown that part of the game, or who had been missing the other parts of the game that they remember playing in the past, that there are other ways to play D&D.

All that said, one reason why a DM (or players) might want to only allow rests (long or short) after every other session instead of every session is to give the players more of a challenge. It would be a way to drive home the point that they are in the middle of a war, and they really have not had even a night to rest: they are always hungry, always tired, always in danger. It will make combats, which tactically minded players might favor, more tense. There is nothing wrong with that.

Now I would not choose to run the game that way unless the players specifically asked me to. For bookkeeping reasons, and for reasons of who my players are and what they want out of the game, I don't think they would enjoy that. Part of it is that most of players are very young (13 or younger) and completely new to RPGs. I am already going to be running a simplified version of 4e D&D, so mucking about with the rules doesn't matter as much because they don't know the rules anyway. :-)

The playtests I ran during development showed me that for an average player--not a tactical master who only lived for combat, but not a complete neophyte--the pared down combats combined with the altered resting rules still made for interesting combats, especially in later sessions. We'll see how things play out as the season progresses. But as the DM, I will say what I always say: YOU (the DM) are the only one who knows what your players want. If they want extended rests every 5 minutes, and that makes the game fun for them, great. If they want to play the whole season with no rests, and that makes the game fun for them, great. We designers can only take the mandates we are given and create the best possible product for the widest range of players.