I may have a solution...
I phoned Apple Support this evening around 7pm and they were really helpful. My ipod is at least back on - albeit with everything wiped - but it's currently resyncing.
They walked me through these steps:
1. Quit iTunes (Force Quit if you have to)
2. Disconnect the ipod from your computer
3. Create a new user account (I named mine Dummy)
4. Log out and log in to the new User account
5. Press and hold the power button on the iPod to turn the thing off - if it doesn't go off, then press the home button briefly as well so that it does.
6. Open iTunes
7. reconnect the iPod to your computer and once the usb cable is inserted fully, press the home button on the ipod to switch it on
8. iTunes should detect the iPod and offer to restore it. Accept the restore option.
9. iTunes will download the software (took about 10 minutes for me - 315Gb) and then you need to follow the instructions and accept the software license agreement.
10. In iTunes, you should see the "restoring iPod Software", "verifying iPod software", etc and once done your iPod should run good as new.
Safely disconnect the iPod (make sure you eject it first), log out of the dummy account and back into your regular one. Open iTunes, reconnect your iPod and iTunes should start to restore the iPod from the backup made earlier.
Be patient with that last one if you've got a lot of data backed up!
I really hope this helps others - my backup restoration still hasn't finished yet, but it's looking promising. I performed all this on a MacBook Pro, but from the way the support lady kept thinking I was running Windoze, I guess the same process will work in that OS too.
Oh - and phoning Apple support didn't cost me a penny despite being well outside the 90 days... in fact, because I'd never called them before, they granted me a 45 day warranty and offered me the option of taking out an extended 12 months too (for £39). I haven't taken them up on that yet, but seriously thinking about it - seems cheaper than buying a new iPod...
Peace