Hi Craig,
Thanks for the note ... we're running the services as ArcGIS 10 map services published on an Amazon EC2 instance built from an ESRI base AMI, also specifying the extents in GCS per the notes so I think everything is OK. We've got access to ESRI premium support so what I'll do is go ahead and raise this as an incident and see where it goes. Will post back whatever we learn, as I suspect there is something we're missing along the way
Thanks, Brian.