I am trying to use panels to implement something that in the past I had done with blocks. My theme has a region called "content top", this displays content above the secondary menu (the tabbed menu that every node has with view edit etc). When I switch over to panels, I can't figure out how to place content in any other region except for the main area ... any ideas
Panels are page nodes and can not be put into regions as we do with blocks. Try mini panels to create panels for regions or itself panels.
You can disable all standard Drupal blocks in the panel page settings and add menu directly to panel.