Sorry it took so long, Sparticus! I was waiting for the real apple experts to weight in, since I only have general knowledge of them. From your description, I would suspect woolly aphids, a common pest on apple trees. I would spray it thoroughly with a combination of a pyrethroid insecticide, such as permethrin, and a non-ionic surfactant to get it through all the "wool". It may take several applications to finish them off. Unfortunately, they also live on the roots, underground, and getting them there is difficult. You could do it with Provado, but that might sacrifice a year's crop--be sure to follow all directions EXACTLY!
Good luck!