The latest on this issue is that I finally got lucky and was put through to the Australian Qantas office and was told that they can't do a "name correction" on my booking because certain airlines that I am using (Qatar & Malaysian) don't allow it. The only "solution" is for me to cancel the booking and re-book. This is obviously not a viable option because the seats probably would not be available after cancelling so I asked to talk to the call centre supervisor. She confirmed this.
So we now have to decide if we cancel our entire trip and cop the loss of $11000 in pre-booked holiday arrangements that can't be cancelled, or take the chance that we will get on the flights with the extra letter in my wife's first name on her eticket.
At least if we cancel now, we would save the 600,000 points and $4000 in taxes and fees from our flight bookings. If we are refused boarding during our trip we would lose that, plus have to pay for our flights home.
So there is a lot at stake here but I think we will start our OWA on Monday and hope logic prevails and a one-letter typo in an eticket doesn't cost us $20000 and 600,000 points. Wish us luck.
The message here for people with OWA bookings: check your eTickets carefully and early.