I have just upgraded to 3.5b2 which is the latest release and the issue is solved. Too early to say that there aren't any other knock on effects, but so far so good.
Went to http://www.tinymce.com and downloaded the zip file for 3.5b2
extracted it locally
then I deleted the directory
assets/plugins/tinymce/jscripts
and replaced it with the jscripts directory from the new version
fortunately didn't have to touch any of the scripts etc, so just replacing the one directory seems to do the trick
Well, they've changed location of I18n files from v3.3 to v3.4 so I don't think it will work with non-English MODx manager languages, but anyway - good job...