Mark,
The plot thickens!
In my stores I have VAT exclusive prices in the catalogue and I display VAT exclusive prices in the store, so the difference with your store is you display VAT inclusive prices.
My guess is that OE 1.61 is pulling in the store displayed prices (which in your case includes VAT), and then calculating VAT again. This probably accounts for some of the weird fixes that people have tried to apply where they have tried to take the VAT off again to make the end result what they wanted.
Probably what needs to happen is that the order editor needs to pull in the VAT exclusive prices, and then it would be OK to calculate and add the VAT again.
I am only guessing here as I have not looked at the code that pulls in the item prices. I did not change the edit_order.php file from 1.61 other than as stated in my earlier posts.