I'm getting far to experienced with pulling this unit off and reinstalling it!
Seems the basic problem was factory assembly of the unit. Way too much black RTV, and perhaps a lack of gaskets. 0.004" clearance between the side plates and the arm, and everything jammed up with black RTV.
The arm that drops the reverse gear was never free to move easily even when new in the box. With the torquing down of installation, it squeezed even more RTV out and essentially locked the arm up against the side plates.
Soooo, I cleaned everything up, used thin paper gaskets to increase arm clearance, and put it all back together.
At which point the arm moved freely and engagement and disengagement was smooth and easy. All was wonderful.
Not quite. Now the blasted thing wouldn't completely disengage from reverse. It would leave the gear hanging just knocking against the rearward transmission gear.
The problem was the external engagement lever on the shaft. It's pinned with a roll pin, and clamp bolted. The subtle problem is the roll pin hole in the shaft is not tight, so the lever arm can be rotated a bit on the shaft.
Once I realized that and adjusted it to its most rearward position, and locked it down (again), all was good.
I have not been out on a ride with it yet. It's cold and raining, and will continue to be this way for a few more days. But I do have great hopes. Sitting on the jack, it works superbly now. Very easy to move and engage or disengage. What was a ham fisted operation before, right from the start, is now a two finger thing.
It does crash mightily when engaging. I see why some folk recommend engaging 1st gear to stop the sprockets from spinning, engaging reverse, and then disengaging 1st.
It's stupid fast in reverse. 12 mph at idle, according to the speedometer. Just a wee bit below 2nd gear ratio. Stupid fast. But, manageable with clutch slippage.
It's a little spooky with regards to accidental engagement. The only thing holding the gear up is the roll pin sitting in the gate. It's shown in this picture.
If that pin falls out or breaks, or that gate tooth wears away, the arm will drop, the gear engage, and some sort of horrible thing will happen.
None the less, backing the bike out of the shed and across the soft grass was delightfully easy with the reverse. I still have great hopes for wonderfullness, and do anticipate being quite happy with having a reverse gear.