I think the bottom line is there is no 'etiquette in this situation'. You have to think of it as a one-off. The other bottom line, it seems to me (can you have two bottom lines) is, as others have said: what have you got to lose? If you want the job, go for it. You can't possibly end off worse as a result.
As to how best to do that, my instinct would be, as again others have said, to be honest. If, as seems likely, they genuinely were deluged with applicants, the one thing you need to do is stand out. I'd suggest looking to stand out for three things: mention that you've applied before, were disappointed not to get it, but have kept your eyes open because it sounded right up your street; be upfront about not being good at doing yourself justice in interview - try to turn this into evidence of Something Good About You ('I find myself trying to 'do a good interview', which is not something I'm good at, which makes me appear fumbling and indecisive; the exact opposite of how I am when I'm set an important job to do'); above all, work hard on making your best possible pitch for why you'd be right for/good at the job.
And do it all on one side of a sheet of A4!
Let's face it, again, you've nothing to lose. And if you did get it and it turned out to be a poisoned chalice, you can always quit.
Good luck!