interesting thread: makes me realize how lucky I've been. I've always been with Telstra, and haven't any grizzles about the hardware, so I've never explored how good their "customer focus" is.
It's bullshit to take your mobile away from you for weeks: the whole point of a mobile is instant communication.
I recently looked at getting an unlocked phone, to take away and use overseas when I'm on holiday. I was surprised at how inexpensive a basic (very basic) unlocked phone is: Nokia, LG, Samsung, and others all have models under $30. I think if I was in the predicament you describe, I'd put my SIM into a cheapie, just to minimize the inconvenience.

If you go down the TIO, Fair-Trading, Consumer Affairs path, I suggest that you do it sooner, rather than later. If these people are any good, you may as well unleash them before your frustration and inconvenience get too intolerable.