Ah, this thread looks to be exactly what I was looking for, the quote from the DMV site (below)
"California does recognize a valid driver license that is issued by a foreign jurisdiction (country, state, territory) of which the license holder is a resident."
Had me confused, I think I brushed over it thinking that it wasn't applicable because I guess I was thinking of "physical" residency, as in where you sleep at night. ;-) I guess I failed at reading comprehension.
So, if I am understanding this thread correctly, even know my wife physically "resides" here in the USA and does not have a "residence" in her home country she is not yet a permanent resident here in the USA and is still currently, in this case, an Ecuadorian resident. Ay Carumba.

At least now it is clear as mud. Ha!
So, just to clarify:
The quote refers to legal residence and not physical residence? Resident vs. Residence? That being the case it all makes perfect sense now. A clear case of seeing what we want to see, I had a preconceived notion in my mind that she couldn't drive on her license but it would appear that perhaps I was mistaken.
Puerco