OK, good news. I've found the problem and it's not with the Pi, it's the Radionics PSU.
While the Pi was flashing it's PWR LED, I measured the voltage between TP2 and pin-3 of the 3.3v regulator RG2. It was reading 3.03v, then dropped to 2.90v then rose to 3.27v and then dropped again in the space of ~ 10 seconds.
I then retested TP1 and TP2 and found that they were also reading between 2.7v to 3.3v. So, I found another USB PSU and powered it up from that, and hey-presto, it booted straight up.
So the RS PSU is unstable. It was bought with the Pi.
So - if you're getting a flashing red PWR LED, it's likely to be the PSU delivering bad voltage.
PSU: RS: 7263069, 5.0v @1200mA.