Ok ive found a fix. Thought id post it here incase anyone else wants to do something similar to me.
I had to copy the tmpl folder out of the mod_j15featuredarticles folder in the modules folder of the joomla install and move it into my html folder withing my template. Then rename the tmpl folder to mod_j15featuredarticles. U can then edit the default.php file to give you custom output. The following code is the file ammended to do what i wanted:
<?php // no direct access
defined('_JEXEC'

or die('Go away'

; ?>
<?php foreach ($items as $item) : ?>
<div class="featuredarticles">
<?php
if ($params->get('title'

== "1"

{
echo "<h3> $item->title </h3>";
}
if ($params->get('intro'

== "2"

{
echo $item->introtext;
}
if ($params->get('body'

== "2"

{
echo $item->fulltext;
}
?>
<?php if ($params->get('articlelink'

== "1"

{ ?>
<a href="<?php echo $item->link; ?>" class="readon">
<?php
}
?>Read More »
<?php if ($params->get('articlelink'

== "1"

{ ?>
</a>
<?php } ?>
</div>
<?php endforeach; ?>
<?php
if ($params->get('link'

== 1)
{
?>
<a href="http://www.dart-creations.com" style="font-size:1px;display:none;">Joomla 1.5 Featured Articles</a>
<?php
}
?>
Ignore all the smiles, there replacing all the ; )
I basically just changed the list element to display as a div, moved the link into a read more link at the bottom and wrapped a <h3> tag around the title. Once this was done the module worked perfectly.
Hopefully this will be useful to anyone else that wants to customize the output a little.
Thanks for all ur help trying to sort out my problem, a very useful module you've written, ill try and sort out a donation for you later.
Dave