@mrangelo, you are the one who convinced me to try by telling me that you did not have a jailbroken phone, therefore, I gained the courage to try it.
To everyone else who is extremely frustrated at this point... I can't see that Apple is expressing any support to those of us who have been experiencing this problem. Even if they are working on trying to solve the problem, they are not offering anyone on this thread any comfort or solutions. There has to be a way to get this mysterious error 29 to the forefront of their consciousness. Their loyal and new customers are going to revolt soon with the sheer frustration of being ignored. I hope they read this thread.
The one thing I can do is to call them again using my call ticket # and point them to this thread. If that gets no results, I will post the name and direct phone numbers of the tech who was waiting for me to send my phone back to them (which I really didn't want to do, and in the end, did not have to do.) Apple must know that this error 29 was not caused by us, the majority who did not jailbreak their phones, buy our apps from anyplace other than iTunes, or do any other "warranty voiding" actions of any type. We only were doing what we were supposed to do, accept the updates deployed from Apple. This is when it hurts the most, and Apple should not want a pool of 'wronged' customers out here suffering as we have.
I ended up following the iRecovery process, which did nothing bad to my iPhone. It was simply a few commands issued directly to the hardware of the device to wake it up out of its locked loop. Full recovery, full restore of the backup of all my media (all 7,796 files). I fully believe that this is exactly what Apple would have done to fix my phone if I had sent it to them, losing many more days/weeks of my precious time.
I am going to see if Apple has a response to this, and if not, I will try to post a better (more clarified) listing of the steps I took to finally get iRecovery to work. The thread on the iRecovery post was not the most straightforward and it took a lot of time to untangle some of what was not clear for me because I was running it on Vista, not a Mac.
Hang in there, hopefully Apple is not going to leave you hanging... it doesn't seem like what a highly respectable company would do to those of you who are left hanging here.