Thanks to those who have shared their workarounds and solutions, I seem to be more or less back on track now. I uninstalled OneDrive and removed all the old aliases. It took me three goes to realised I had to remove the aliases and I kept ending up with duplicate OneDrive folders within old OneDrive pathways (and even a OneDrive2 which baffled me for a while). So, if you're reinstalling, first remove everything. Back up your files, delete the OneDrive app, then search for 'OneDrive' through the finder and delete old folder aliases with that name.
Having done all that, I've reinstalled it from the App Store and 'pinned' my documents folder. All the files within those folders have now synced and any changes I make subsequently via the Finder seem to be reflected when I look at those documents via the browser or mobile app. I'll be keeping an eye on it over the course of the week but this is the first time I've felt like it might be working since the stressful update took place.
I'd say the user experience is now only *slightly worse* than it was before the update but better than it was yesterday. I've still got all these ugly ticks and clouds next to all my files but at least they work. When I click 'Save' I know my documents are being saved in the cloud - that's all I ever wanted from this service. Overall it's a bit of a dip, but it's much better than it was a week ago when it looked like I had lost everything. I'm still unimpressed with Microsoft for the way this has been handled - it has cost me a week of work and did no favours for my mental health - but I'm relieved to be back on track and wanted to share my process just in case it's helpful for anyone else.