Now that my phone's behaving normally, I could calmly recollect and retrace the chain of events, and I guess if some hack who knows better, gets to read it, there may be some clues getting revealed.

It was late afternoon, I was logged into skype via my phone, and also via my Windows desktop. A conversation started with somebody, and I used my desktop during this conversation. The conversation was fairly long. This is quite usual way of living for me, because I do find using my desktop's keyboard more comfortable when I am in a tech discussion. Normally this causes the conversation to keep getting reflected on my phone too. But that day I guess something went wrong, the conversation did not reflect on my phone for quite some time. Later all of a sudden my phone went kind of berserk. All the conversation started to jingle on my phone and it was going on rather incessantly, driving me nuts. I tried to cut this off by logging off from skype from my phone. The jingling didn't stop, and the notifications kept ringing on my phone. I went to the conversations dialog, and tapped for "Clear this conversation". The jingling still didn't stop. And also realized that all the desktop icons and widgets were gone - from all the views. The notifications still seemed to loop. I rebooted my phone and still found that the notifications were looping on the desktop. No luck! the desktop was still a clean slate, though I could still use the task switcher to go to the other areas and make my phone calls and do almost everything else. Switched off the phone pulled out the battery, put it back in, and restarted. No luck, the situation persists. I switched off again, this time pulled out my SIM and started the phone again. The situation still remained the same. Put the SIM back in, and restarted the phone. No change in situation. All through during the situation, I could SSH into my phone, and see that hildon-home and hildon-desktop seemed to be using a lot of CPU, and tried those pkills on these processes. The looping of the notifications kept going on. I even deleted the /home/user/.rtcom-eventlogger/el-v1.db file before and after these pkills. Looked up this site, and thought that if I may be able to get the looping cycle to complete sooner things might normalize. So I tried those tranisition.ini hacks. Nothing seemed to work. Even reinstalling the hildon-* was useless. Day 2 - Frustrated, I made the first post on this thread hoping somebody might know better. Still no luck.

Third -day I suddenly found the phone was back to normal.
Hope the hildon hackers can figure out something out of this, and yes if someone queries, I can try to give more clues objectively.

Though I really hope there was better and accessible documentation.