The problem was caused by me not having broken my document into relative sections. Pages therefore thought that all 12 pages were 1 section and it won't let you reorder "pages" within "sections".
I solved this by inserting section breaks at appropriate points (at the end of a relevant paragraph for example), this allowed me to move my "sections" around in the thumbnail view as I needed.
The errant blank pages were caused by having "breaks" inserted incorrectly, I solved this by turning on "invisibles" under the "view" menu and simply deleting those (paragraph breaks, page breaks etc) that were in the wrong place.
In conclusion, you need to stop thinking of your documents as "pages" and start thinking of them as a collection of "sections", once you've told the program which bits of text constitute a coherent section (by using section breaks) then you can move them around freely.
It took a while to get used to, particularly as Word doesn't care about your text and just surrenders itself to the (incorrect) whims of the user, but now that penny has dropped, its made me have a new found respect for Pages.
It helped me to stop thinking of my document in terms of pages and start thinking of it as a series of sections: OK, so, you have a master "document" that you're writing in Pages (the application).
Your "document" is a series of text, pictures and data that are actually (as far as Pages is concerned) a collection of "sections". Your "sections" appear within the "document" on physical "pages" i.e. the pieces of paper that your document will be printed on.
When you're trying to reorder "pages", Pages (the application) tries to prevent your document from going all hong kong phooey by only allowing you to reorder "sections" instead. If 1 section ends on page 12 and another section starts immediately on the same page, Pages (the application) will assume they are actually separate paragraphs of the same section and won't let you move them independently.
You fix this by inserting section breaks at the end of each section, Pages (the application) will then start your new section on a new page and your Table of Contents will be updated accordingly.
Its remarkably simple, you just have a little pain barrier to go through where you scream and shout at your mac and say things like "**** you Apple, you're meant to be the interface experts" and then you discover through the helpful people on this forum that you were doing it wrong and the application was trying to preserve your documents integrity.
If you're still reading, I'm shocked, but goodnight, thank you and may your god go with you.
x
P.S. I'm not religious btw....