Ok - I have managed to solve the issue! Wooo!!
Basically I reloaded a previous save game file which I luckily had from before I completed any of the side quests (when I first arrived in the citadel). Annoying, but it only took me about an hour to get back to the point where I had the freezing problem.
Ok, read the following carefully:
When you first reach the Citadel, make sure that you go to the Citadel tower and convene with the council BEFORE DOING ANYTHING ELSE. In my initial playthrough, I left this until last - i.e. I completed all the side-quests INCLUDING the story driven side quests (meeting Garrus, Wrex and Tali) BEFORE going to speak to the citadel council. When I did this just now (going to see the council first) it triggered a cutscene with Saren (in holographic form) and the council discussing your accusations against Saren, resulting in them sending you away because you have no proof etc etc.
importantly - I DID NOT SEE THIS CUTSCENE IN MY INITIAL PLAYTHROUGH.
Basically, I think the sequence of events doesn't work properly if you miss this cutscene, and this must be why the second cutscene with the Council (after you receive the evidence from Tali) was going all screwy.
So, I think to solve this issue, make sure you go and see the Citadel Council in the Citadel Tower before you do any other story related mission. I.e. Do not visit Chora's Den and speak to Harkin, do not do the 'Fist' side quests with Wrex, and do not initiate the sequence where you save Tali from the assassins. You can do this all AFTER you have spoken with the council.
I really hope this solves the issue for everyone else who was experiencing this problem. The second cutscene just played for me without a hitch after completing this sequence of events in the correct order. I literally jumped up and down! I never thought being a completionist / explorer would ever backfire on me in such a spectacular fashion.
Little tip for future playthroughs: Manually save your game CONSTANTLY.