Hi, I'm an expat Pom too, but in Asia. My HK licence is validated from my UK ATPL. If my UK licences expires, it will severely limit my options for work. Not just because I may one day wish to return to the lannd of cold drizzle and high taxes (unlikely) but alo because If I decide to go and work in a third country, I will probably find that the third country will not validate a licence which was validated from my original. It appears most rating authorities will only give you a licence based on your original ATPL.
If your Kiwi ATPL is validated from your UK one, then the answer is a definate YES! Also, another thing to consider is that if your UK ATPL is just that, one of the original UK licences and not a JAA licence, then if it expires, the UK CAA will require you to get a JAA licence, which will incur lots of expense and probably an exam or two!
The fact it expired in 2007 shouldn't be a problem. If you have a rating within the last 5 years, then you can just do another one and get the licence renewed. Outside five years, your ratings and licences will be deemed to have expired for good. (I think, but check with LASORs)