Cals per 1lb

1 lb of fat is approximately 3500 calories. This means if you have a deficit of 500 calories per day then you can lose 1 lb fat per week. ( 500 x 7 = 3500).

Brilliant so if MFP has already got me on a deficit and then I burn 500 cals a day exercising but don't eat it back I can lose an extra 1lb a week.

That is essentially correct but not how MFP is meant to work, it has already set up a deficit for "Healthy" weight loss and expects you to eat back exercise calories.

When it comes to losing weight, faster doesn't always equal better, it can throw in complications such as higher muscle loss, losing too much too fast seems to increase the chance of loose skin and slow, steady weight loss can help in both adherence and maintaining your weight when you reach maintenance

The deficit I'm on with 1lb lose a week, I am now happy with the amount I'm eating, so the exercise will put me up to around 2lb a week which isn't that unhealthy.

That would depend how much you have to lose. The usual recommendations are:

More than 75 lbs to lose: 2 lbs/week
40-75 lbs to lose: 1.5 lbs/week
10-40 lbs to lose: 1 lb/week
Less than 10 lbs to lose: 0.5 lb/week

See here for more details on setting your calorie goals: http://www.myfitnesspal.com/topics/show/819055-setting-your-calorie-and-macro-targets

68lbs so that is near enough the 75lbs

Sounds like you have already made up your mind but I do have a quick question for you, does after your take off your exercise calories are you still netting more than 1,000 calories?

3,500 = 1 pound

I think your diary looks pretty good. I find that if I eat back 50-75% of my exercise calories, I can go over on the weekend and still net a 1 to 1.5 pound loss.
You didn't gain it all at once, you can't lose it at once.
Just stay with it, and plan to revise your eating/exercise for the rest of your life.

500 'cals' a DAY of exercise is a LOT a HUGE amount - are you sure that you can sustain that?

As long as I go to the gym I can pretty much do the workout that my PT has set, which includes cardio (alot I'm hoping to do a 10k in september and 4 weeks ago I could only run 30 secs!), weights, restence training and a very comprehensive ab work out.

Yesterday I only did part of it (Day 1 of month end I'm an accountant) as I had been at work for an age and wanted to get home. Tonight I will do the whole workout.

I do wish you every success in your chosen method and would also say that it is far less extreme than a great many I have seen in my approx 9 months here

The only reason for advising caution is the amount of people that I have also seen set themselves tough goals, fail to meet them, get down on themselves and quit the site

I would also advise at least a days rest because if you are pushing your body hard it will need time to recover and for muscles to repair

However as I said at the start of this post, I wish every success in your weight loss and fitness goals

ETA Grammar

Good luck! And remember that if and when you hit a plateau don't be discouraged. Just move your goal forward and don't stop doing what you're doing now. Remember to have some fun on the way and include a cheat meal every now and then.