L1 to H1B - Transfer

[pradeep_gorinta]

Can someone clarify me whether I am eligible for L1 to H1 tranfer?

Here is my story,

1. I was working for EMP1 in India.
2. My H1B petition by EMP2 was approved on September, 2006.
2. Got H1B visa stamped on my passport on November, 2006.
3. Now EMP1, for whom I was working, offerred me L1.
4. L1 petition was filed by EMP1 on January, 2007. It got approved in the same month.
5. I went to the consulate again for L1 stamping in february, 2007.
6. Got L1 stamped successfully, but the officer stamped "Cancelled without prejuidice" on my earlier H1B visa.
7. Then I travelled to USA on L1 in March, 2007.
8. Now I want to move to H1B. EMP2 who sponsered my H1B earlier is still willing to take me.

Now here are my questions.
1. Is my H1B petition still valid even after consulate officer cancelled the visa with "Cancelled without prejuidice" stamp?
2. If earlier H1B is still valid, can I request for change of status from L1 to H1B?
3. If my status change is approved, do I have to go to the consulate for visa stamping during my next visit to India?

Thanks in advance
Pradeep