Success!
I again wiped the phone, rooted it, then used Titanium Backup to restore stuff, and the camera still works!
I restored ALL my apps (the ones I got through the Market, not all system apps!), as well as the data only from the following system apps:
-Accounts
-[Bookmarks] Browser 2.2.1
-[SMS/MMS/APN] Dialer Storage 2.2.1
-Wi-Fi Access Points
-TwLauncher 2.2.1
Again, only data, and one by one, not using the batch feature.
Note that you do lose your regular phone settings, e.g. security and ringtones/notification sounds.
Note especially that if for some reason your phone should still recognize that you originally had the pattern security feature enabled, then right now ANY pattern will unlock it! Go into Settings - Security and remove all security, then re-enable pattern and set it again. I noticed that my phone was not secure at all at that time...
I also came across an interesting new ... feature - after activating my phone, it asked if I wanted to use Google backup features, and I said yes. Some time after that, the phone started downloading at least some of my apps from the Market and installing them - without ever asking me!
I don't know if this was related to me starting the Market (and then deciding "no, let's root first, then install titanium") or this Google backup feature... Just thought I'd point that out - the first time I ran into this, it took forever for Titanium to restore my backups because the phone was trying to do the same via downloads at the same time! This time, I waited for it to finish (plenty of downloads failed - why this isn't fixed, I don't know...), then I started Titanium to restore.
I hope this will help someone else.
I'll keep monitoring this thread, so if anyone would like more instructions on what I did please let me know.
Tomorrow, I'll probably try the same on my wife's phone which doesn't have 2.2 yet...