So I have to get a CPL on a single engined aircraft, then add a multi engine rating to it....? Why? Would make sense if they were crediting the skills test etc but it doesn't appear to be the case.
No, this is not true. You can do your CPL skill test on a twin-engine aircraft as long as the FTO has the required approval. You will find that most FTOs that have DA42s in their training fleet have this approval. You would have to do the MEP course (five hours - which would also serve as familiarisation on DA42), then do the CPL/MEP skills test in one flight, then IR/ME SP skill test. So in theory you could get your CPL, MEP and IR/ME SP with about eight hours in a DA42.
Incidentally, has anybody ever tried applying to an FTO in another EASA administration? An application would be handled on its individual merits, rather than being squeezed through a complex seive of multiple national regulations. You might end up having to do less retraining. Plenty of ex-mil pilots from francophone countries get their EASA licences from French FTOs. I can't see why ex UK QMPs should be treated any differently.