Well experimenting with different cut depths and feed rates didn't get me anywhere this morning.
I took facing cuts from 0.1 to 1.0mm deep at 0.035, 0.017 and the 'illegal' 0.008 rate. The photos are very dull so I've not bothered to upload them. Depth of cut made very little difference. Reducing the feed rate does improve finish, but not dramatically.
One thing: watching cutting carefully, I noticed that obvious 'tree-rings' occur whenever swarf gets caught under the tool. There's an slight 'tick' and a ring appears. Clearing the swarf continually with a toothbrush improved the finish: I suppose what's really needed for best results is a flood of coolant.
Just for laughs I tried taking 4mm off the diameter with a triangular carbide insert. The single deep cut was no problem at all for the lathe, but golly the swarf was HOT. No flowers please, I'm only slightly burnt. The finish was better than I got facing with HSS.
I'm starting to think that for rough use tool settings aren't all that critical. There's probably more to it than I've learned today – Jason's pics on the forum prove he gets a better finish than I do despite me having a similar lathe.
Dave