Gents hold onto your hats please, I think I might have made a breakthrough... I can test this a bit further, but at this point I think the quicker I get the information out into the wild for further testing the better:
I was going through the O2 thread again and spotted more than one mention of TCPOptimizer, which of course we know doesnt work, but they specifically mentioned that at some point a GM had recommended a radical reduction in the MTU value and said it had worked. I tried this logged in and immediately had latency of around 450ms.
I didn't want to believe it so I immediately set the MTU back to windows default, rebooted and had latency in the thousands.
I then ran optimizer again and this time chose its optimal values, which don't change the MTU. If anything this was worse - I couldn't see the latency in Dalaran because it stayed at 0 and I had two DC's back to back.
So having now done sufficient control tests I set the TCP stack back to defaults lowered the MTU to 1000, rebooted again and I'm currently sitting in Dalaran, with a ping moving between 550 and 650 (this is on MindSlyde's realm Dunemaul).
For reasons of stating the obvious you need to apply the MTU value to your primary NIC, you need to run the optimizer with elevated privileges and you need to reboot after making the change.
Can't wait to hear your feedback on this one.
EDIT: This is the Optimizer I used - I am running up to date Avast, no alarms went off, standard disclaimer applies
http://www.speedguide.net/files/TCPOptimizer.exe
Change the settings to windows default if they are not already, reboot after that change and then put it on custom and change *only* the MTU on the primary adaptor down to 1000.