Steve,
1. RAF Northolt, being military controllers are allowed to use 500ft separation in their radar manoeuvring area, rather than the 1000ft/3nm separation applied elsewhere in the London Control Zone. If you were not willing to accept 500ft separation then I suspect you would have been held off at a location that provided 1000ft or 3nm separation from conflicting traffic.
2. Visual separation can be applied between two helicopters on the same heliroute provided the visibility is 6km+, the pilots agree and traffic information is passed. If a pilot is unable to accept visual separation, then another routeing would be given, e.g. southbound H7 against traffic eastbound H3, the pilot would be held at a holding point separated from the other helicopter until it had passed, or ultimately a clearance would be refused due to the requirement to provide standard separation.
3. Your interpretation is correct. Hold at any intermediate clearance limit for 3 minutes and then proceed as per the notified routeing. Also squawk A7600 or A7700 if there is another emergency. In practice, I would expect you to perhaps land at Battersea to rectify the problem and talk to ATC there, before proceeding to the I.O.D and back, because you are going to cause a great deal of disruption to London City traffic. If you are holding at London Bridge and get a radio failure, although the 3 minute rule applies in practice it would be prudent to reverse the route at that point after squawking A7600, rather than continuing to the I.O.D.
4. I have never experienced a helicopter with a radio failure, although we practice this eventuality in the simulator.
Hope this helps.