I contacted Alan Seiden with this question and his answer fixed my issue.
You can use a 1-byte character parameter in place of a specialized indicator type. For example:
Input
$params[] = $toolkit->AddParameterChar('in', 1, 'My indicator', 'MYIND', '0');
Output
$retVal = $toolkit->AddParameterChar('out', 1, 'My indicator', 'MYIND');
The XML (for an output param) will come back like:
<return io='out' comment='My indicator'>
<data var='MYIND' type='1A' ><![CDATA[0]]></data>
</return>
Which yields PHP in the $result['retvals'] of:
array(1) { ["MYIND"]=> string(1) "0" }
Which will evaluate to true/false (1/0) correctly as long as you don't type check.
Thank you very much Alan!