I too have been following the facts with great interest because I don't want to fall foul of the rules next time I fly into Avalon on the same approach. Agreed there was a lot of confusion about the terminology that the pilots and approach had used, but I've a feeling had the pilots briefed the missed and the reciprocal approach beforehand, I dare say we won't be talking here today.
I appreciate the arguments for and against both sides but one thing which hasn't been picked up was at 23:03:39, the pilots reported "No no, we are visual, ..." just after leaving point D towards point E (see diagram in ATSB report). I presume by "visual" here the pilots meant visual with the runway, but how could this have been if they were on the outbound of the teardrop ? Note this was in response to approach's question "so come back visual or by the VOR?" to which the answer should have been "will return visual, not VOR" or words to that effect to indicate they prefer a visual approach. By claiming to be visual on the outbound, they suckered themselves into believing it was a circling approach for the reciprocal runway. This could be a further indication that they were not fully mentally prepared for the 36 landing.