It seems you can fly microlights on an FAA certificate in the UK after all.
Having been told initially by the BMAA that it was not possible, I queried their response and was ultimately referred to the CAA. Cut a very long story short, I now have it in writing that provided the restrictions of the foreign ICAO licence are adhered to its priveleges can be exercised in the UK (which is only confirming what LASORS says after all). Therefore provided I am current and legal in the eyes of the FAA I can fly UK registered aircraft in the UK. No distinction between microlights and Group A applies.
A professional pilot would be expected to convert the certificate after one year, but this does not apply in the case of a private pilot.
Furthermore, although differences training for microlights would be mandatory in the UK, my letter from the CAA merely 'recommends' that I undertake such training (which of course I plan to do).
The most difficult part about all this was identifying someone who was prepared to look at the issue and give a considered and authoritative response. It is the CAA and not the BMAA which makes policy on pilot certification issues, even in the case of microlights.
Credit to the CAA for a pragmatic policy. This means that if you are looking for cheap VFR flying in the UK in the form of microlighting, and can visit the US every couple of years for a flight review and a medical (or even undertake them in the UK), there is no longer any need to join the JAA pilot certification regime with its inflated charges.