What are my options? (Jailbroken iPhone 3G iOS 4.2.1 stuck in iTunes recovery mode)

[MichaelVick]

This is my first post on everythingiCafe and all I ask is a pointer in the right direction.

Last August I bought for my kid a jailbroken iPhone 3G iOS 4.2.1 (8C148) for use on T-Mobile voice/text with WiFi for data & Windows XP; at the moment, the iPhone is currently stuck in iTunes "recovery mode".

Unfortunately, I never owned an iPhone before and certainly I haven't done a jailbreak (although I believe one is in my near future)

Unfortunately, I don't know the baseband version (because the iPhone 3G will not boot to the Springboard/Winterboard GUI).

I need advice on which general direction to proceed.

Here are relevant details:
The jailbroken iPhone 3G iOS 4.2.1 has been working fine since August on T-Mobile
The only 'problem' was that Cydia video apps apparently work best on iOS 3.1.3
Suddenly, this weekend, the iPhone 3G locked itself into iTunes recovery mode[img]http://***************/adminfs1/images/8.gif[/img]
I connected it to iTunes but stopped short when it wanted to install whatever iOS it wanted to install (I don't want to do the wrong update & later regret it)
Doing research, I have come up with a tentative plan for recovery
Would technically knowledgeable folks here please review my plan & offer advice?
In my rough-draft plan, the goal will be mainly in this order:
Recover the phone, if possible with all data & with the jailbroken iOS intact
If that's not possible, at least recover the data & get the iPhone back on T-Mobile
That may require 'unjailbreaking' or learning how to 'jailbreak' myself
If possible, I would also like to downgrade to iOS 3.3.1
What confuses me is what are the proper recovery steps for the data and the iOS.

How does this plan look so far?
Download the iOS 3.3.1 ipsw from iClarified
Connect the iPhone to Windows XP iTunes via the USB cable
Start the backup process & hope that the data backs up (it has never been backed up)
Hold the shift key down to install the iOS 3.1.3 ipsw (somehow?)
Once the iOS 3.1.3 is installed, I need to then figure out how to jailbreak it
Presumably I use one of these WinXP jailbreak tools
iOS 3.x, JailbreakMe jailbreak tool
iOS 4.1 & 4.2.1 greenpois0n jailbreak tool
iOS 4.1 limera1n jailbreak tool (Windows & Mac)
iOS 4.3.3 pwnagetool Mac-only jailbreak tool
iOS 4.3.1 Redsn0w 0.9.6rc9 jailbreak tool, Windows & Mac
iOS 4.3.3 Sn0wbreeze 2.7 untethered jailbreak
Or, maybe I can skip all that and just use an 'unjailbreak' tool?
Would someone kindly advise me as to the next steps?
May I ask:
Q: What would you suggest as my next steps to resolve this problem?