iPhone 3G stuck on Apple Logo after restore with 4.0.2

I made the mistake of taking my iPhone 3G fly fishing and it died after getting splashed. It was running 4.0.2. I followed the usual recommendations including opening the phone and gently warming it with a air gun on low. There was no apparent moisture inside the phone. While it was open I decided to replace the battery for good measure. Now it is stuck in the Apple logo even after what appeared to be a successful restore with iTunes on a Mac. Got same result after attempting restore on a PC. There were no error messages during the process - just the progress bar across the iPhone and a reboot wherein it remains in the logo loop. I assume something died as a result from the dunking but its strange that it will connect to iTunes and go through the restore cycle. I toyed around with trying to downgrade to 3.1.1 but not sure that will yield any better results. Any suggestions on other things to try or is it toast?

Thanks