I'm not qualified to give you any real advice, but my opinion is that you should try any appeals processes that are open to you, and if that doesn't work, try and move on.

I suppose the first thing to note is that ALL PhD work is supposed to be breaking some kind of new ground. Granted, some will be more significantly new than others, but being the first to study something doesn't really make you any more qualified for a PhD as the point of a PhD anyway is to show that you can make a significant and original contribution to the scholarship.

If some kind of appeals process (if any are open to you - make sure you ask if there's any extra work or whatever that can be done to turn your MPhil into a PhD, like an extra year or two) doesn't work, then I doubt there's anything more you can do. Time spent fighting the decision is likely to just be time you could have spent moving on to a new job or a new PhD or something. It really does suck to work so hard on something and to not get what you hoped for, but sometimes it happens and you have to roll with it. An MPhil is nothing to sniff at, anyway.

Good luck.

It can be very tricky and it's really easy to get caught in circles in your thinking.

I'd suggest every now and then re-reading bits of your core theoretical texts. Remind yourself of exactly what points they're making, and what kind of analysis they think is fruitful.

When using a theoretical framework, I'd say you're usually using it as a lens through which to analyse the text. For instance, a postcolonial framework will take an event/text/person/whatever and analyse how it impacts and is impacted by postcolonial concerns (obviously, depends on which theorists you're using specifically). So you might be looking at how the response to X event silenced the voices of the women affected (as a very brief and crude Spivak example). The key then - and where I find it gets hardest - is to take that one step further: the 'so what?' question. You need to then be able to answer what further implications that analysis has on the event, the field of study, what we could learn for the future, whatever it may be.

That is, unless the point of your paper is to justify/prove/expand upon an existing theoretical framework, in which case you'll be doing a bit more of the other aspect you mentioned - using the texts to validate the theory.

I'm sure you knew all that, but I always find it helps to start my thinking from square one every now and then.