Since the album artist has been cleared and each song has a separate artist, your iPod should not be grouping those songs together in album view. I have over 50 compilation albums on my iPod. They each are labeled as being compilations and all have Various Artists for their Album Artist field. Each album is grouped together when I look through the album view on my iPod. However, when I sort by artist, each album is then split up. So I am not sure what is going on with your iPod since I have never experienced an iPod touch grouping everything together as Various Artists before.
Have you tried deleting the songs from your iPod and syncing them back over? Auto-sync should automatically update the track tag information of your songs but it might be acting buggy. Simply instruct iTunes not to sync those albums/songs to your iPod, go through the sync process, and eject your iPod. Then plug it back in, tell iTunes to sync those songs/album, go through the sync process, and eject your iPod.
64GB iPhone 5 | 64GB iPad mini | AppleTV 2 (2012) | AppleTV 2 (2010) | 2012 15" MacBook Pro, 1TB SSHD, 16GB DDR3 1600 MHz, OS X 10.8.3 Mountain Lion | Apple Lossless | iTunes AAC 192kbps VBR | iTunes 11.0.2| Library size = 1.04TB | Legacy iPods: 3G 40GB, 4G 40GB, 5G 60GB, 160GB iPod classic (2009)