You're butting your head against fundamental differences in philosophy between the licencing systems. Like a few of my friends I have ATPLs from several countries (in my case Australia, USA & UK). Balancing the different requirements between the systems can be a pain.
The JAR & UK system(s) don't have an 'instrument rating except for circling approaches' system. It's a fundamental part of the JAR instrument rating to be able to complete a circling approach. Your FAA licence clearly shows you haven't passed that equivalent component and, from your post, you haven't demonstrated it to a JAR examiner.
Also, unlike the FAA, an examiner isn't necessarily responsible for ascertaining whether or not you have met all the prerequisites for the issue of a licence and then issuing a temporary until the authority catches up. Pretty much they are tasked with conducting a flight test and only the flight test. Their grading of whatever test you did then goes to the regulatory authority and, along with all the other supporting paperwork, is then judged against the requirements for a licence issue and action taken accordingly. You may have flown the test perfectly but if a 't' isn't crossed, or 'i' dotted somewhere else, then the decision is 'no'. Mind you, the FAA can be equally bloody minded if you haven't met one of their requirements so it swings both ways.
Having said that, I would have expected a circling approach to be included in your JAA flight test as a matter of course.