So I managed to get my LG remote working with the Raspberry pi by modifying my remote.xml file in XBMC. I had to remap my Previous/Next buttons on the remote to work as Back/Menu buttons instead. This seemed the most sensible approach since my use of previous/next is mostly limited to rewind/fastforward and this same function can be achieved with the left/right directional arrows on the remote. Essentially the previous/next buttons were useless! Now keep in mind these changes were specific to my particular Lg tv model. It seems newer models dont have the back button issue so normally the remote would work out of the box.
I also remapped by pause button to bring you all the way back to the home menu, except when your in fullscreen video/music (then it actually pauses the media). Also made the previous button bring up the power menu when in the home screen (since there is no menu to back out of anyways) and the next button brings up the favourites menu when in home screen. These 2 menus are accessible from the home screen anyway if you navigate to the little icons but a button for them makes just that much easier to access.