Haha you can guess that I'm a little single-minded in my guitar setup preferences?
I know the tele's not an obvious choice, but I used to make a sound like the one in question using my tele through a twin reverb copy. Basically as you say, a silly amount of distortion, enough volume to feed back, ride the volume pot to keep it vaguely under control, and then throw more reverb than an episode of Dr Who at it!
But yes - maybe a humbucker would be even better.
@domstone - I'd listen to estreet if I were you. He knows his stuff far better than I do