Also I believe the approach path of the ILS can be slightly different to the approach indicated by the visual system, ie; they can each have different touch down points, so you can be dead on the PAPIs for example, but slightly off the ILS?

PAPIs can have varied threshold crossing heights (and glide slope angles) to compensate for different aircraft, as if a B747 follows the lights down with a threshold crossing height of 50ft, the gear may touch things it's not supposed to ;)

The indications from the PAPI may also be "received" a lot higher (pilots eye) than the ILS signal. This is another reason why the Threshold Crossing Height for a particular runway is varied, as PAPIs are usually configured to allow for the largest aircraft expected to normally use the field.

The issue arises when a crew in a smaller aircraft is looking at both ILS GP and PAPI indications. Each system may have different touchdown points, or it could be the difference in Threshold Crossing Heights. As previous posters have alluded to, it doesn't actually matter - as long as the pilot is aware of the potential issues and understands what information (s)he is receiving and should be looking at, there shouldn't be an issue. Large aircraft which may run into difficulties should have clear crew instructions as to what indications should be followed under what circumstances.

P.S. @Centaurus - A pilot should see 4 reds on a PAPI at an angle of 2.5° (assuming a 3.0° glideslope).

Some good gen coming out here; thanks, you knowledgeable people.

One thing which I believe can be an issue in poor vis (ironically just when you want them to be helping you most) is refraction in misty/foggy conditions making what you see from the lights unreliable.

Which is why you should know your aircraft eye height... By my reckoning if you follow the PAPI to the runway all other things equal you'll end up landing around 7 metres long per foot the PAPI eye height is above yours. ie if your aircraft eye height is 45 feet and the PAPI is 64 feet eye height you'll land ~130 metres long...