Clearly something is wrong, and it needs fixing.
The clutch was adjusted and frees off perfectly, and without the transmission cover fitted the gearchange return works absolutely fine. If I just loosen the four cover bolts the gearchange shaft frees up, but that's with the the bolts so loose you couldn't run it like that.
My suspicion was a bent gearchange rod, when I got the bike (in bits) the cover wasn't fitted, and the shaft could have been bent in storage if all the engines weight had ever been put on it. Suspiciously about the only spare part the bike came with was another gear change shaft, so I decided to change it anyway as the splines for the lever were in better condition. Here it is fitted, and all working perfectly. The return spring is the correct 3 turn early one. It is the shorter modified type, so there is no issue with the spring fouling the boss with the dowel. I presume I've got the arms into drum selector right, unless you can see different.

Happy with my work, I put the covers and sprocket etc back on, I checked all was working well before I tightened the cover up, all was fine.
Then I tightened the cover up - and its binding again, no attempt by the lever to return to centre if you push it up or down. Bugger!
The bosses on the inside of the mission cover are pefect, so its not going crooked when tightening up. I have backed off the clutch adjuster, so the cover isn't being tightened against the clutch pushrod. There's not that many things it could now possibly be. I'm wondering whether to replace the three oil seals the gearchange shaft goes through in case they have turned to stone over time and are causing the drag, but I'm not hopeful - they would drag just as much before the cover is tightened. Also, it can't be a sideways endfloat issue causing binding, as the shaft is free to slide as far as it wants in and out of the cover inside those oil seals.
I'm assuming the parts in my bike aren't that unique, so someone is hopefully reading this thinking 'been there, done that!' I hope so, it has me stumped at the moment.