Our current backup process is doing a SVN HOTCOPY every night, to a backup location on a different machine. Can I somehow recover from that backup and retain all revision histo
"svnadmin hotcopy" actually copies the entire repository to another location. The copy is indistinguishable from the original repository, and can in fact be used as a repository itself. So, you should be able to copy the results of svnadmin hotcopy back to your repository location and have a perfectly valid, restored repository.
The advantage of hotcopy over a regular filesystem copy is that it respects Subversion's locking mechanism.