Well, I found it.
While working in the NSW state library, I couldn't stand it any longer, and went and wasted a couple of hours in the microfilm section. I started in the Sydney Morning Herald reels for 1980 and worked my way back. Finally I caught it around 1976.
The comic was called Max and Min the Weather People, by one Max Foley. I immediately did a web search with this info, and amazingly found a reference in a blog from only a couple of weeks ago. There isn't much info about the artist either, this entry here is about it. He seems to be still alive, and under 70! I wonder if I can contact him and see about getting the series scanned and put online?
Rereading the comic again after all these years, it's just as good as I remember. It had a very sweet and dreamy vibe, and seems to hark back to the surreal dreamlike comics of the early 20s like Little Nemo, although much more modern, with a lot of self-referential humour.
The final destruction sequence was roughly as I remembered it, although it went on for several weeks. No wonder it stuck in my mind, I must have been appalled by the way this entire fictional world was being undone week by week, with dozens of familiar characters meeting their end in various ways.