Okay, so what had happened was that the outer shaft motor's pinion had slid up, which caused all the grinding and gear destruction.

The hobby shop (Hobby Town in Cumming, GA) that sold me the helicopter a couple of months ago said, "tough luck, buy a new motor for $10". A little frustrating that the thing was obviously defective and they wouldn't stand behind it - but at least I got it working again for the price of the motor and new gears.

Although now I have a new problem in that the outer shaft doesn't turn as freely as the inner one. I definitely notice that the lower rotor doesn't spin as much after I power down. My guess is that in the extraordinary struggles I had in getting the little screws out the first time, I may have negatively impacted a bearing or something. It flies reasonably okay - although I have to now trim the rudder control all the way to the left and it still turns a bit on me.

Thanks for all the help, though! This forum was a huge assistance.