Hi Paul,
re: "baffled",
My understanding is the same as yours, that if highlights are really shot, the detail information just isn't there and nothing can recover it.
But for those pics where it's touch and go, RAW does give you a far better chance of saving the picture, or at least making a better "bad job" of it than jpeg might allow.
However, I think John means that because RAW captures far more information in the first place, it's more likely that there will be something in the "blown" highlights that can be recovered.
I've also found that I bin fewer pictures because of blown highlights by using RAW, but I still get 'em sometimes - and I've also got no doubt that a better photographer (or PPer) than me would be able to get good jpeg results from scenes that would beat me.
Re: "totally baffled",
likewise with my D70, any picture - jpeg or RAW - needs PP sharpening, and I also had the impression that for most of us that's the norm.
But "good" also involves white balance, exposure, contrast, saturation, composure etc. and I was talking about the (errrr...) "Big Picture", assuming that there'd still be a bit of post processing involved.