That's really strange, James. I have no idea of what's happening. It does look like an ugly bug. I suggest that you raise a ticket at e-on and send them the file.

Your image looks very good. Like you wrote, I also have the feeling this isn't done often in 3D and so I made something, a long time ago... well, not similar but inspired by... :-)

http://www.renderosity.com/mod/gallery/index.php?image_id=1526818