Just to update this thread, I have now received a response (after substantial delays) to my appeal.
Unfortunately, the CAA have more or less upheld the original decision. They have stated (following an appointment with one of their consultants) that although it does seem the original assessment of my history was inaccurate (not a psychosis, but rather severe OCD symptoms instead), and that my present condition is satisfactory, the risk of relapse is a concern. They've technically changed their position in that instead of being permanently barred from certification, I can now be reassessed (subject to a further psychiatric review) after another ~2 years from now (5 years since original recovery). Practically though it's of little relevance as by then there's no way I could continue towards training to be a commercial pilot (expired ATPL exams, advancing age and need to commit to a career etc).
They cite the universal requirement of there being significantly less risk than 1% per annum of relapse as reason for my being classed as unfit. However, the letter doesn't really explain exactly how the decision was made that I don't fall under this limit. And for various reasons, there are specific factors that I believe indicate a lower risk of relapse but which I don't feel were taken into consideration (partly because they weren't mentioned).
The risk threshold also specifically refers to incapacitation, but I completely disagree with regards to the impact even the most severe symptoms I experienced years ago could have on airmanship and my ability to fly safely. I've never experienced anything that I believe could have any relevance to flying an airplane.
I will be progressing with the final appeal stage (to the CAA Chief Medical Officer) and appealing on these bases. However, I appreciate my own arguments are unlikely to sway the panel, assuming they are correct. I'm therefore looking to see if I can see another specialist who may be able to review my case and provide their own assessment as supporting evidence. Does anyone have any suggestions as to possible candidates for this? A poster on this thread did recommend someone to me already via PM and I'm in the process of getting in touch with them, it's just a little slow with the holiday season. I'd really appreciate if anyone else has further recommendations based on their experiences.
I'm also wondering if anyone also has experience specifically with this final appeal stage. I understand there is the possibility of attending a hearing to make my own representations in person, and also that in certain cases it may be possible to forgo the option of having a hearing and instead request a "very quick" decision be made due to impending training deadlines/licence expiry etc (according to the CAA's official guidance document). However, it is really difficult to find any further information; for example, regarding what the hearing actually entails and how advisable it is to actually have one.