Well, that was short lived. Interface 3395 works fine with my DK2. Then I udated to latest (3397) and the avatar is smeared across the display when in Oculus mode.
I am now binary searching to find out which release broke things again.
This is what my avatar looks like in 3rd person 2D mode:
and this is how the same avatar is rendered in Oculus mode (looking down toward feet). A imilar bug happens when looking at the head - it is stretched to a cone.