Thank you for your responses. I went home and did some measuring. The existing overhang is 1 1/4" for the 1" thick tread. My new nosing has a 3/4" overhang and the thickness of the nose end measures 3/4" also. I had already purchased and primed 1/4" material to cover the riser.
This is what i am thinking, maybe you can tell me if i am way off.
1- Cut the existing tread flush with the riser.
2- Install the 1/4" riser.
3- Add a 1/2" shoe moulding (like this one
http://www.homedepot.com/webapp/wcs/sto ... =100091348) to the top of the riser, flush with the tread.
4- Install the plank and nosing as instructed.
5- Fill any remaining gaps with filler.
I believe this will "build out" the riser without giving up tread depth. So the new overhang measured from the riser to the end of the stair nose would be 1/2" (moulding) + 3/4" nosing = 1 1/4"!?!?!