Apologies, I've now utilised various forum functions to make my experience more pleasant.
Jack, I really don't think it's that important to have the top kit, and certainly I've never had an agency tell me so. I'm quite surprised that this is their attitude really.
Did they give you/did you ask for a reason? If not, then I think that it would be the best course of action for you, communication is the key here...if you can assauge their fears that 350D = less capable = amateur wannabee or whatever, then I think you'd be much better off. It also shows your commitment to the cause far more than if you wave a 1D in their face.
Anyone can buy kit but to be able to use it and get results, and for an individual to justify their choices when questioned are far more important assets in my book. Call them, ask for a reason, and explain your reasoning. You might be surprised at their response. The very fact you ring back shows you're not ringing every company you can find chancing it. They might just have given you the brush off as you were the 100th person that day with a 350D to send in a folio and the other 99 "always wanted to be a sports tog...so can I have a job"
In addition, with no disrespect meant, I wouldn't class this as "a royal kick in the 'togs". Approaching agencies and getting knocked back is part and parcel of trying to be a sports photographer.