Very similar incident happened to LOT with a 737 at Heathrow some years ago. They entered east instead of west and flew round not very convincingly on the standby instruments before landing back. It is fairly basic system knowledge that you can force the IRS to accept a wrong position (by repeating the false data entry) for reasons explained above. What is not so simple is to fix the problem once in the air. The captain in the Sydney incident had 22000 hours so rather than filing this under children of the magenta line I think the CRM and problem solving aspects are the interesting bit. The idea that you are going to fly a long haul leg without the primary instrumentation and autopilot is a bit out of touch with reality and indeed regulation. Problem solving and recovering the systems (as far as was possible) is the bit that went seriously wrong.