I am concerned that I-shares are strictly short term Hedge fund trading instruments. If Vanguard ETF's are mirroring other I-shares investments, wouldn't that suggest that Vanguards ETFs would be volatile? I am hoping that they mirror more conservative Vanguard mutuak fund investment philosophy.
Yes they mirror, no they are not more volitile. They will trade close to their NAV but the mutual funds from Vanguard (these are "open-end" funds) will trade exactly at NAV price. The drawback of the mutual funds here is that you can only trade them once per day and the price you get is not announced until you have already bought/sold a position. Also, with most open-end funds you will incur penalties for selling within a short period (usually three to six months). If you are looking long-term justify your choice based on expenses (yearly management fees plus loads or brokerage commissions). One will be the clear winner, that's why Vanguard gives you the choice!
"Closed-end" mutual funds are volitile as their shares can trade at a premium or discount to NAV. It's a little complicated but just know that ETF's, thanks to high liquidity and the institutions that provide it, will always trade in a tight range to their NAV.