Not sure if this is known bug with VRRP. I am currently using Router 3.3 OS and performed the following test.

1. Configured CC1 (Master) and CC2 (Backup) in pre-emption mode. CC1 and CC2 both connected to a local LAN

2. Pulling LAN cable on CC1, CC2 changes state to Master & Running. Re-inserting cable back to CC1, CC1 becomes Master/Running and CC2 changes state to Backup. This is normal expected behaviour

3. In the next test, I power CC1 down and CC2 state changes to Master/Running. Powering CC1 up results in CC2 state as Backup and CC1 as Master.

4. Identical results to (3) obtained if both units are powered down and up simultaneously.

Only way to revert to normal behaviour in (3) and (4) is to pull one of the LAN cables. Also observed similar results in (3) & (4) in non-premption mode too

Do folk know if this is a known problem?

From your dscription everything seems to be working properly. When you power down master router (CC1) backup becomes master (CC2), when you power CC1 up it becomes master and CC2 becomes backup. Isn't it how it supposed to work?

I would have expected CC1 to return to Master + Running state as opposed to just Master.