Thanks for the tip Sonavor.
Looking at PCB3 and the base of TR2, i read no voltage and I see no effect when pressing the mute button on either the front panel or MCP remote. It does jump to ~3.5V or so when the unit is turned off (and is in stand-by mode).
So I started to look at PCB4. Pin38 also reads 0V and is steady when either mute method is attempted.
Then I looked at the mute signal coming into PCB4 from the outside world. This comes in in pin 24 of IC1. This pin reads 5 volts, but when I press the mute button on the front panel, I see a 2ms pulse to 0V and then back to 5V. So a digital signal is being sent to IC1.
Since I have a parts unit, i tried simply swapping PCB4 and the unit behaves exactly the same. Remote works well as far as I can tell except for the mute function. Pin 24 of IC1 will display the same 2ms pulse to 0V when you press it the front panel mute. Pin 38 (and the base of TR2) both show 0V and no effect when pressing mute.
Both PCB4s have now been recapped, but they showed the problem before and after.
I'm stumped!