That did fix the boot problem, and as hoped it booted into EM (emergency mode, where it loads the kernel from flash) so I could actually telnet into it once again. Unfortunately thats where things stoped going to plan, as while formatting the drive it hung (while creating the inodes no less).
I tried it a couple of times but with the same result. I've come to the conclusion that the drive itself it probably broken, which would also explain why it suddenly wouldn't boot in the first place. I'm going to take it back and try and get a replacement HD tommorrow, hopefully the shop won't need a receipt, since I've already thrown that out. >_<