Hi,
I just wanted to report success using ControllerMate to remap capslock to backspace, as well as a good amount of other changes. Everything works like it should, including holding down to repeat, and you can even disable the normal backspace key to train yourself to the new one. In addition, you can create somewhat complicated macros, such as a simple double tap of the backspace deletes an entire word (alt+backspace).
The process is quite simple. Once installed, simply drag the keyboard into the list of pages on the left and find the row for capslock. On the bottom, you can change it's action to backspace.
I believe the ControllerMate demo contains all this functionality, but if you like it, you might consider buying it.