Revelation was a pretty awesome book. 
Anyhow, God says to "be holy for I am holy". According to sucky dictionaries, "holy" means to be prefect, but sucky dictionaries suck. It means to be seperated from sin, therefore with God. When we're saved we begin the sanctification process in which we become holy (it never finishes though, until we die).
Revelation is crazy. There are many, many different ways to understand it, and most are more than likely misinterpretations. It's a very sensitive subject, because Revelation, without a lot of careful study, can be completely misread.. And can lead to a lot of.. bad stuff. Yeah.
I believe more in the fact that when we're cleansed from sin, it's all at once. And it's when we ""go to heaven"". Sin taints us. If we're sinful, we're sinful. We're not partly good and partly bad. We're just fucking dirty. Sin is like a disease. We don't say "their throat has the flu". No, "they have the flu". Sure, we may become better people and seem better, but we're still sinful, we're still dirty, and that won't change until Jesus flicks his magic wand, and, bibbity bobbity boo, we get to wear itchy white robes and sing carols for the rest of eternity.
LoL.
My preferred method of interpreting Rev. is this: John saw many things that he described. What he could not explain, he explained as best as he could with what he did understand. That means things he described, in certain measure, were like what he said. Other things were metaphorical.
I think your "cleansed" analysis is correct, but I think the important thing is that, before the "going to heaven" part, we don't become "sinless" in life, but we're no longer accountable to our sin. No longer being held accountable to it gives us the ability to come before God in a way that we couldn't before Jesus died on the cross.
It's like the husband or wife who says to the spouse, "I know you're not perfect, and I love you anyway." (Or, if you're Kaleeko, it's "I know you're not perfect, but I less-than-three you anyway").
Joe, good job at explaining what holy meant, although you did it kind of backwards (you said what it doesn't mean), so I'll clarify. As it's taught these days, to be "holy" means to be "set apart to God." As Joe said, that means set apart from sin. We're called to be holy here, but it's impossible; and in light of the teaching that we are not accountable to our sin, we are given holiness through faith.
