I'm not too sure you have many options (other than getting BT to terminate the connection and your contract, allowing you to go back to O2 LLU).
The reasons why your FTTC speed is so much lower than your ADSL2+ speed (you would have been on ADSL2+ with O2) is basically down to cable length.
FTTC uses VDSL2 which degrades, as the line gets longer, at a different (faster) rate to the speed degradation over ADSL products. ADSL is better, than VDSL, over very long lines.
Whilst FTTC (VDSL2) is perfect for those of us on really long lines back to the exchange (as we now only have to get the signal back to the local street cabinet) - I was lucky to get just over 4Mbps using ADSL2+ (after a lot of tweaking), VDSL is quite poor if your line length (back to the local street cabinet) is very long.
Eventually you get to a point where the line to the cabinet is so long, you'd actually be better off trying to squirt an old ADSL signal all the way back to the exchange.
It appears you're beyond this point and the engineer was possibly correct in saying it should never have been installed (although when first connected, you were a bit borderline - possibly the installing engineer thought it worth leaving).
Then again; you could have a line fault (although I'd have thought this would have been the first thing checked by the called out engineer).
Did you have any luck rebooting the modem & home hub (or have you just left them alone since installation)?
vDSL2 FTTC Infinity with BT
DL Sync 80Mbps
UL Sync 20Mbps
Edited by adebov (Sun 20-May-12 17:29:12)