What is the proper understanding of "taking refuge" in Buddhism? Many years ago, a Zen Roshi said in a class that "nobody else is your boss except for you.  Only you can make the decision and apply yourself to practice, nobody else can."  So, I've heard this many times from various Buddhist traditions.  However, Buddhism also has this idea of "taking refuge" in various things.  If you are responsible for yourself what is the point of "taking refuge?"  What is the proper understanding of "taking refuge" in Buddhism?
Traditional refuge formula goes like this:


  Buddhaṃ saraṇaṃ gacchāmi.
  Dhammaṃ saraṇaṃ gacchāmi.
  Saṅghaṃ saraṇaṃ gacchāmi.  
  
  To Buddha for refuge I go.
  To Dhamma for refuge I go.
  To Sangha for refuge I go.  


According to dictionary, "sarana" means den or lair, but also more broadly, shelter or refuge. Apparently, at the time of Buddha, "sarana" meant being under political protection of someone. For example, when a peasant acknowledged becoming a subject of, say, king Bimbisara, he would say "Maharajam Bimbisaram saranam gachami" -- literally, "To great king Bimbisara for refuge I go". This would serve to indicate that A) the peasant accepts no other lord and won't pay taxes to anyone else and B) the peasant now expects the king to provide military protection from bandits and other neighboring lords.

The same way, when beginner Buddhist goes for refuge to Buddha, Dharma and Sangha, he or she A) promises to accept no other religious or philosophical authority as higher than Buddhism and B) expects to find protection from worldly troubles in Buddhist practice.

In Tibetan Buddhism, this idea of taking up a "provisional boss" (my play on your words, not theirs) is said to be a temporary measure employed for the duration of training, until one gets to the ultimate protection, the luminous mind of Bodhicitta.

The above is my own understanding, at the same time I really like explanation given by Chogyam Trungpa, which directly dismisses your dilemma about the notion of refuge contradicting Buddha's imperative of one being one's own island:


  By taking refuge, in some sense we become homeless refugees. The point
  of becoming a refugee is to give up our attachment to basic security.
  We have to give up our sense of home ground, which is illusory anyway.
  We are suspended in a no-man's land in which the only thing to do is
  to relate with the teachings and with ourselves.
  
  The refuge ceremony represents a final decision. The ceremony cuts the
  line that connects the ship to the anchor; it marks the beginning of
  an odyssey of loneliness. Still, it also includes the inspiration of
  the preceptor and the lineage. Acknowledging that the only real
  working basis is oneself and that there is no way around that, one
  takes refuge in the Buddha as an example, in the dharma as the path,
  and in the sangha as companionship.


-- basically, he defines taking refuge as becoming a (metaphorical) mendicant, which refers to letting go of one's stereotypes about oneself and reality, and the false sense of security they provide. As one thus becomes truly placeless (radically open-minded), the extent to which one takes comfort in Buddha is only as inspiration of predecessor having made the same path.


  At that particular point, the energy, the power, and the blessing of
  basic sanity that has existed in the lineage for twenty-five hundred
  years, in an unbroken tradition and discipline from the time of
  Buddha, enters your system, and you finally become a full-fledged
  follower of buddhadharma. You are a living future buddha at that
  point.