[Andrew wrote]

I’ve never really understood how the identification of Babylon with Jerusalem is made, when the thread of imagery from Daniel through 2 Thessalonians to Revelation so strongly suggests a pagan power. What are the reasons for this?

There are many, actually very many reasons for this.  These reasons are carefully documented in two powerful books:  Who is this Babylon by Don K. Preston and The Olive Tree Mystery by Lloyd Dale.

I will try to summarize those reasons for you:

First some general principles:

In my understanding, the Bible, especially from Genesis 12 to Revelation 22:21, is essentially a book of covenantal establishment, covenantal history, covenantal prophecy/promise, and covenantal promise fulfilled.  Therefore, when we study the Bible it is essential to keep all these aspects of covenant in proper perspective.  In my opinion, it is impossible to understand the NT properly without a proper understanding of "covenantal history" and "covenantal promise" because the NT is primarily and essentially a book of covenantal fulfillment.  Any attempt to try to understand the Bible without keeping our studies within these covenantal contexts is doomed to failure.  The precise covenants that must be kept in mind as we study are:  The Abrahamic Covenant established (Genesis 12-17), The Mosaic Marriage Covenant "added to the Abrahamic Covenant 430 years later (Galatians 3:17); The New Marriage Covenant with Jesus Christ (Jeremiah 31:31ff; Hebrews 8:8ff; Luke 22:20; 1Corinthians 11:25).

Key points in the Mosaic Marriage Covenant:

Betrothal (Exodus 6), Marriage enacted (Exodus 19), Marriage Law given (Exodus 20, et al.), Israel’s violations of the Marriage Law (2Kings 17:21-23; et al.), divorce of the house of Israel (Jeremiah 3:8; Hosea et al.), Divorce certificate promises to the house of Israel (Hosea, Amos, et al.),  the last days of the Mosaic Marriage Covenant (Hebrews 1:2; et al.), and the end of the Mosaic Marriage Covenant Matthew 24; Revelation; et al.)

From the NT:

The central controversy in the first century was the identity of the Children of God.  The fall of Babylon would settle that issue.  This identifies Mystery Babylon as first century Herod temple Judaism in the city of Jerusalem.

Mystery Babylon the harlot is filled with the blood of the prophets and saints - Rev 16:6, 18:20, 24; cf Matt 23:37, Acts 7:52

She is ‘the great city where also the Lord was crucified’ - Rev 11:8 - cp 17:18, 18:10, 16, 19, 21

Her luxurious riches provide comparison between her dress and the high-priest’s ephod - Rev 17:3-5/ Exodus 28:5-6, 36; the temple tapestry matches the colors of the Babylonian tapestry in Wars 5.5.4; the gold cup reflects the temple’s implements; etc etc.

Her destruction - death by stoning (Rev 16:21, cf. 8:7) and fire (Rev 17:16)  the Law’s penalty for harlotry.

Her replacement by a new bride - the new Jerusalem (Gal 4:25-31; 2Cor 11:2; Rev 19:7-9, 21:2)

From the OT:

The image of Jerusalem/Judah as the unfaithful wife of God, the harlot, was used many times in the OT (Jer 3:8; Ezek 16; 23; et al.)

Jerusalem presented as the bloody city (Ezek 22) full of abominations (cf. Jeremiah) and committing lewdness (22:9).

The second temple city; Jerusalem, and religion; temple and temple worship, came from Babylon full of whoredoms (Ezra; Nehemiah; Malachi)

As the evidence mounts up, the conclusion is inescapable - Jerusalem the city of harlotry and abominations  is Mystery Babylon the great, The mother of harlots and abominations of the earth. 

I pointed out in The Coming of the Son of Man that the acts of judgment in the first part of Revelation (seals and trumpets) all draw on OT texts that describe judgment on Jerusalem, whereas the acts of judgment recounted in the second part (bowls) all draw on texts that describe judgment on Israel’s enemies.

That’s an interesting assertion.  Which texts do you identify which you think support your conclusion?

I think that there is a relative easy solution to your conundrum, but I want to see your answer to the above question before I provide that possible solution.

I’m also confused by your reading of the new creation at the end of Revelation. Does this belong to the ‘fundamental eschatological hope that we now have’ - and are these meant to be your words or mine? Or is ‘new creation’ a metaphor for the new covenant? 

The new creation, i.e. the new heaven and the new earth in Revelation 21:1, is the New Covenant in the blood of Jesus Christ (Luke 22:20; 1Cor 11:25; cf. Jer 31;31ff & Heb 8:8ff) which created the "new Jerusalem" i.e. "the bride of Christ;" thus, this is the basis for the ‘fundamental eschatological hope that we now have!’

These are your words reworked to become mine, which was done to show my basic agreement with you, that the resurrection of "the rest of the dead" in Rev 20:11-15 shows that evil does not win in the end.

Yes, as I understand it "’new creation’ is a metaphor for the new covenant" which may also be understood as a product of the new covenant.