How do I purchase from the US iTunes store if I'm based in Australia and all of my funding sources (Paypal bank account, credit card billing address, etc) are based in Australia? Every time I go to purchase something I get knocked back because I don't an

The iTunes Store in a country is intended only for use by that country's residents while they are in the country. To use the iTunes Store in a country you need a credit card (or other card type if acceptable in a country) issued in that country, billed to an address in that country, and also be physically present in that country when using the store. You are also restricted to waiting 90 days between country changes.

E.g., "The iTunes Service is available to you only in the United States, its territories, and possessions. You agree not to use or attempt to use the iTunes Service from outside these locations. Apple may use technologies to verify your compliance. - http://www.apple.com/legal/itunes/us/terms.html#SERVICE"

While it is against apple terms and conditions it is possible to do.

You just need to create a us based apple id.

Using the free method you can create an apple id not linked to a credit card or address just make sure you change your location to the us.

You wont be able to buy anything unless you get a us credit card with address or us iTunes card but you will be able to get the free stuff.

You cannot use another countrys itunes store at all.

I did actually manage to download an app from the US store but now because of it I can't change back to the Australian store

You will not succeed: it is not because of Apple: it is the mediarights, they are different everywhere.