>     // We need to cancel the timeout since we have connected.

>    timer_.cancel(); // < Fires the timer regardless. Because we are calling cancel() from inside an io_service call???

Read the reference carefully:

http://asio.sourceforge.net/boost_asio_1_0_0/libs/asio/doc/html/boost_asio/reference/basic_deadline_timer/cancel/overload1.html