In your first post on this issue (in March) you said that the Home Office has been holding your wife's passport "from the moment she entered" the UK.
Now you are saying that you sent it to the HO when you made your first EEA2 application.
You also said that your wife's embassy int he UK had told you they could issue a new passport to her without submission of her expired passport.
Whatever the situation, if the Home Office has your wife's passport you can:
1. Apply for a new passport and then make a new EEA2 application.
2. Complain to the Home Office about the time taken to respond to your requests for the return of her passport and about the time it's taken to respond to the reconsideration request. Persistence may pay off! The complaints section is:
http://www.ukba.homeoffice.gov.uk/sitec ... complaints
The reason I asked aout when the passport expired is that you might want to make an argument based on its having been valid at the time it was submitted.
3. Involve SOLVIT
http://ec.europa.eu/solvit/site/about/index_en.htm