How can I create a visually appealing Castle wall from one colour? I have a bag of hundreds of classic light grey 2x4 bricks, and 2x1 bricks. 

How can I use these to make some interesting castle walls?
Considering the very limited choice of bricks, I don't think you have much options.

The first is the obvious stacking of 1x2 bricks, which the added bonus that it can bend (slighly).

The second is the obvious stacking of 2x4 bricks, which is equally boring.

What I would suggest is to build windows in it, which you can easily achieve by mixing the two bricks. My LDraw PC is dead, so I'll need to explain this otherwise. Let's say that the wall depth is 2L, so basically from the front you'll see either bricks of 1 or 4. Let's represent these by "1" and "4444". What you can do is as follows:

  1444414444144441444414444144441444414444144441444414444
4444 4444 4444 4444 4444 4444 4444 4444 4444 4444 4444 
4444 4444 4444 4444 4444 4444 4444 4444 4444 4444 4444 
 1444414444144441444414444144441444414444144441444414444
4444144441444414444144441444414444144441444414444144441
  1444414444144441444414444144441444414444144441444414444


Notice that there is a window every 5 studs, which is exactly the same as you would have if you were using the castle wall panels.

For the top, you can have a layer of 2x4 bricks in the other direction, so that they go one stud further in front and in back. End with a parapet build of 1x2 bricks.