This looks like a promising approach, thanks Nealtw. I have an email out to the engineer re the structural issues, will let you all know what he has to say. After that we'll figure out the draining and I'll post an update. Thanks again!
It's been awhile, but I wanted to let you know that we were able to successfully fix our basement drainage issues and reinforce our foundation, with the help of our structural engineer. I've posted my blog entry about the process below. Thanks for your assistance!