Thanks Guys,

I am using Word 2003, although I think the document was originally made
with Word 97. I have written a little macro to insert an equation
object, set the style to be centred, and auto create a right justified
number for the equation. I then go back into the equation object and
usually end up with a couple of lines of equation. Having said all that
the strangeness of being able to bottom align things using the format
painter still works with an equation created from scratch without my
own styles etc.

Paragraph spacing looks exactly the same and any amount of chopping and
changing between exact/multiple, space after/before does not help. I
have noticed that inline clip art is bottom aligned. It might be a case
of the 'magic' equation actually thinking it is a picture, but a double
click on it opens up EE, so I don't think that is it.