I am currently an H1B visa holder. I plan to use my I-485 based
Employment Authorization Document (EAD) to work this summer. I
understand that my status will change to Adjust of Status (AOS) by
taking such action.
My question is that can I switch back from AOS to H1B status by a new I-129 H1B
petition later on, say Dec. 2006? Do I have to go oversea for such visa petition?

With while you are adjusting your status can't you just keep getting
EAD's every year until you are approved for your green card.  Getting
an EAD was relatively simple when I did it, but remember to leave the
country you need a special document.

you are right. I can keep renewing my EAD until my green card get
approved. However, I was suggested by my attorney to keep my
non-immigration status, such as H1B, to avoid certain risks, e.g. I
have to leave the US once my 485 is denied for whatever reasons. As I
am in employment base immigration process, these reasons could be
unemployment period, which is most likely for me, as I am doing
cutting-edge research that little US companies are involved in such
business.
Thank you for your comments, though.