OK, so having deleted /var/local/system/mntus.params the Kindle now reboots - back to that dreaded "...needs repair..." screen.
So whatever may be causing the problem has not been fixed by overwriting the system folder with mmcblk0p1.img
I suppose in this state it is not likely to be possible to launch the Amazon firmware update process again?
Seeing that's what screwed it up in the first place, maybe if it were to complete properly this time, it would then work.
Alternatively what would be the easiest way to copy a complete drive image of healthy Kindle to the /us partition and from there try to overwrite everything on the bad one?
Considering the /us is formatted in fat32, is it possible to preserve permissions correctly if one were to use dd?