I thought that reflectors, by definition, reflect light directly back towards the source.

Nope – they reflect light at an angle equal to the angle of incidence, but in the opposite direction. To reflect directly back to source you need an inside corner reflector as pictured above.

Does scotchbrite work in the same way as prism type reflectors above then?

Without googling, that’s my understanding.

I’m not sure that any sort of “absorb light from one direction and spread it around” product exists

Anything bright white is a very good approximation.

reflective tape on my bike

bike reflewct 2 by TandemJeremy, on Flickr

Does scotchbrite work in the same way as prism type reflectors above then?

Googling reveals that Scotchlite actually contains microscopic glass beads – which is apparently also the standard way to make paint retroreflective.
http://www.rema.org.uk/pdf/history-retroreflective-materials.pdf

BTW if you want to set off a speed camera on a bike (assuming you can find one on a good downhill, or your name is Mark Cavendish), then using the corner of a box and covering in tin foil to make an inside corner reflector as shown above is a good way to increase your radar cross section so it detects you – or so I was told by the radar experts in work when I inquired about this.

Going back to pedals: I use a pair of the plastic ‘platform’ pedals that clip to one side of SPD cleats for commuting for just this reason. No problem to ride in if you’re only used to cleats, and a big help with visibility. The only problem is that I lost one on a root strike on an off road section. No idea if you can buy them, mine came with some SPDs a few years back.