USB hard drive -> Powered USB hub -> RPi <- Wifi Dongle
The hub was using a 1A/5v supply (this didn't come with the hub, is a universal power supply - the hub's own plug was 2A but couldn't even spin up my hard drive when connected to the pi).
It worked great for about 5 days, then yesterday the hard drive/hub was no longer connecting to my pi. Then I noticed a burning smell, thought it was the hub, disconnected it. Smell still persisted, even when Pi was plugged into NOTHING except the Micro USB power supply.
The TP1 capacitor was quite hot to the touch, but when I removed my plastic RPi case I found the real culprit: The d17 (capacitor? Not sure what it is) was EXTREMELEY hot, even though pi had been plugged in about 30 seconds. The burning smell was this thing melting my plastic case. Photos:

From the photo below you can see the d17 appears to have some sort of crack in it.

For completeness' sake, this is a Model B rev2. The backpower from the hub was giving me bootloop issues, so as per suggestions here I taped off the 5v pin in the USB plug coming from my hub. Sole power for the Pi was from my HTC phone charger.
So where to from here? Is my Raspberry Pi dead? Can I return it under warranty? What the hell happened?!