Ok, Clutch adjusted to spec, 3" between end of cable housing and barrel-end - check. Use bolt and locknut on clutch arm to adjust for 5mm play at handle - check.
End of clutch arm no longer hitting exhaust, in fact, nearly 1cm of clearance.
However, am still experiencing hard downshifting, particularly from 5 to 4. In all other respects, clutch appears to be working as it should. When held in while bike not in motion, no drag or lurch when shifting from neutral to first, or with any other gear.
Scratching head...