I'm not sure what I would do, but I think I would take off the feed dogs and position plate, even though you don't have to remove them, if you can move the hand wheel to get the springs in the position shown. It sounds like you don't want to do that. Can you see the springs that are shown? If you can see and get to the spring shown, perhaps you can release it without it being in the position shown. Another possibility would be to use sewing machine oil around the edges where the thread jam was. I've heard/read that sometimes it helps. Maybe, let it soak in, apply some more, let soak in, play with the hand wheel a bit. Oil some more, let it set, try to move hand wheel again, repeat.
Good luck.
Janey - Neat people never make the exciting discoveries I do.