Yes, of course. You have the right to travel in your home country for two days. Most UK railway companies are included in the pass. You can take as many trains as you need to get out of the country on an outbound/inbound travel day. 

Thanks, Brendan. Presumably Avanti West Coast is a participant.

Avanti West Coast? Sure!
Take in account that, if you want to take the Eurostar, you have to reserve, € 30,00. Also for most trains in France and Italy, and between those countries. Prices differ.

Yes, honestly Interrail is great value within the UK! Only the Heathrow Express, heritage railways and the Tube are not included. Even the London Overground is. :)

But coming from Euston to St. Pancras it'll be easier to walk.

Btw you can get free seat reservations through GWR website or at ticket offices.

So, for two people, we could easily be looking at another couple of hundred euros in reservation fees.

That entirely depends on what trains you will be using. If you travel via Brussels and Germany and Switzerland, then you can travel quite fast to Milan without reservations, or an inexpensive reservation for Brussels to Basel (where it can get busy). For travel via Paris you can get a €10 reservation for the TGV to Strasbourg or Mulhouse and then travel without reservations to Milan. In France and Italy, you can use regional trains without reservations. They take longer of course but if you're not going too far on a day, then it's a good idea to check what options there are with regional trains. In Italy, an intercity reservation is only €3, so that can also be an option to save soe money and still travel at a reasonable speed.

The cross-border TGV into Switzerland is expensive indeed but you can avoid it (as opposed to the Eurostar). Taking a TGV as far as Strasbourg or Mulhouse would be my choice too.

The route via Brussels works too (did it a few days ago) but make the inexpensive optional reservations for peace of mind. Trains are definitely busy.

You could also consider a night train but they tend to be expensive, esp. sleeper compartments…

I'd go as far as Strasbourg on Day 1 (Eurostar to Lille-Europe for a same station connection or to Paris-Nord with a 10 min walk). The following day slowly cross the Alps... :)

If you've got time, consider the stunning Bernina Railway.