Hi people, and thanks for help so far.
The car came back from the mechanic yesterday, and had a new radiator put in it.
The original radiator had two small cracks on the back of the top tank which supposedly allowed the coolant to drip down the back of the radiator under driving conditions, and was collected in a sort of built in drip tray on the bottom tank and/or evaporated before becoming visible on the ground.
We have been assured that there is no head gasket or head problems, but to my limited knowledge that still does not explain the exhaust gas in the coolant, or the water being pushed upward in the radiator under mild revving with the radiator cap off.
I will test it for water usage over the weekend, but I sincerely hope the mechanic is correct, as the radiator replacement was only one third the cost of a head job (and I don't mean the expensive hooker type)
Cheers
Ian