Simon;
...oh the joys of of dealing with miserable bolts like that...
My advice (oh no...another armchair mechanic!): keep drilling and easy-outing (left or right-handed, alternating), increasing the size slowly until you get movement of the remains...if you don't get movement by the time you have increased to the size of threads, you could drill it out totally, and possibly have a threaded insert welded in place (access?) similar to how Burner Welding repaired the torn out tab of my anti-sway bar mound.
Source:
http://www.sw-em.com/nagging%20clunk.htm
Cheers