The iPhone Dev-Team recently released RedSn0w 0.9.8b7 which brings explicit support for a tethered 4.3.5 jailbreak as well as new iOS 5.0b6 iPad 1 jailbreak:
Apple updated the iPad1 iOS5b6 IPSW without changing its version number or filename, so we’re releasing redsn0w 0.9.8b7 to handle both the original and changed IPSW. We’ve also added explicit support for a tethered 4.3.5/4.2.10 jailbreak (instead of pointing at the 4.3.4/4.2.9 IPSWs) and fixed a 4.2.10 problem.
You can download RedSn0w 0.9.8b7 .
You can find our instructions on how to jailbreak your device here:
RedSn0w can perform a tethered jailbreak on iOS 4.3.5 for all devices except the iPad 2, according to MuscleNerd’s tweet:
So those who really do want tethered 4.3.5 can use redsn0w pointed at 4.3.4 (except iPad2)
We strongly recommend NOT to update to iOS 4.3.4 or iOS 4.3.5 to preserve untethered jailbreak. We will soon post step-by-step tutorials on how to perform iOS 4.3.5 tethered jailbreak.
You can download the latest redsn0w .
UPDATE: Here are latest step-by-step tutorials to jailbreak iOS 4.3.5:
iPhone 3GS
iPad 1
iPod Touch 3G
iPod Touch 4G