You might just try filing new teeth on the ratchet and squaring up the edge on the pawl that engages with it, it looks like there is enough pivot left in the mechanism that it would make it work again.
4onthefloor: Yeah, I looked at that, knowing it was a good idea, but the teeth are pretty much smooth and the pawl just skips right over them bad boys. Since the teeth are heavily riveted to the latch frame, I'm not sure how I'd be able to file new ratcheting areas withoug removing that piece to do it on my workbench. See my last post to see what I did. It didn't solve my "opening the door from the inside" problem, but at least it kinda closes...
