Spent a weekend with the updated firmware and the Wattbike.
As reported above the not so good news is that this does not fix the 4th gear indicator stick issue. That would appear to indicate that its a Zwift issue - and as they now apparently have an Atom hopefully this will resolve the issue. The turn-off / turn-on reboot trick does however clear the issue and while slightly painful is in the context of the next bit - ok.
More importantly does the firmware deal with the other issues that were causing the Atom to be a less than delightful experience on Zwift.
Gear Reset - the reset of gears to 1 when you stop pedalling or have a cadence or watt change is now much more predictable and did not spin out; the gear still automatically drops but the timing is better and the as you get going again things are smoother as it tracks back up to the right gear
Gear Changes - these are much crisper and while you are not going to get any satisfying clunk’a’chunk you can grab a couple of gears or drop a couple when you get caught out on a hill and its a much more coherent experience.
Shifter Connections - these seem much improved and had zero drop outs on rides - knowing stuff is going to happen when you click the slightly ineffectual button is helpful (!)
Ride smoothness - the feels is distinctly better and while there is a lot of whirring and clicking the drive is much more predictable and getting some power on is much less lottery-like with pedal slip.
Stand-up - this is better but still a way off right - standing up in anything other than a fairly high gear requires some good pedalling discipline to avoid slippage and catch-up clunk; coming out fo the saddle has to be done with care rather than just a stand-up mash
Overall, Wattbike may have just about rescued the Atom from ignominy and as they refine the firmware further (and someone fixes the Zwift issue) this will presumably get better and better. No longer regretting the purchase but not quite a believer yet - although the Erg functionality is really good and the amount of analytic data way in excess of anything that will make me a better rider - the delightful frustration of the peanut and PES score will continue to haunt me for a while as I search for my perfect pedal stroke.