Okay, I'll answer my own question ;)
I didn't see the two different tabs at top of the file browser side menu, and I realized I could create a new file in either "Local" or "Dropbox". But even with that there is no way to move a file that was started in Local to Dropbox, or vice-versa. But some searching led me to a couple of workflows (but of course) that will do that for you. I ended up with Smart Move - Updated but there are others.
Still not as seamless as iCloud sync is say with iAWriter, but it does have the benefit of forcing me to write on my iPad more and of course all the workflows (and workflow possibilities) can't be topped.