Even when bouncing flash off the ceiling or nearby walls, you can occasionally blow out or overexpose a picture.
What methods work best in Lightroom 3 or other software to reduce or eliminate the impact on the photo?
There is a stop or so of headroom in raw images so you may get away with just reducing the exposure slider in LightRoom. If it's totally blown and there are areas which are pure white then there's no real fix.
There is a "recovery" slider which attempts to fix overexposure in the even of one channel becoming overexposed (usually the red channel if it's faces) but if all three channels then you're out of luck - any fix will result in grey skin as you have lost all colour information.You could try painting in the correct colours in Photoshop but it will be a time consuming fix.
Bouncing is a tool for making light softer and giving it another direction. For controlling power, you should instead use flash exposure compensation (in TTL mode) or adjust aperture, ISO or flash power.
If the blown surface is not essential for your photo, perhaps it can be cropped out. Clipped highlights are inadvisable because the bright area draws viewer's eye.
I find the best way to adjust photos that have exposure problems is to first click the 'triangles' in the corners of the Histogram view in the Develop Module.
These will show you, in your image, where you have highlight blowouts (in red) and dark areas where detail is lost (blue areas). Now the trick is the adjust the image so that you eliminate most of the red and blue.
Its best to start with how the workflow is arranged in Lightroom: start first with Exposure, reducing or increasing as needed, Now as you go down the workflow, note that the adjustments impact smaller and smaller portions of the image. Exposure being at the top impacts the most, so be careful and pay attention to its impact.
Next, adjust Recovery, which will make dramatic impacts to overblow areas, but too much Recovery can add odd artifacts. Keep adjusting and examining your image. Then move to Fill light, which is useful for overly dark areas, and Blacks, which of course impact dark areas, but also overall contrast.
You can also adjust Brightness and Contrast, bringing you image back to acceptable levels.