Cracked it! TIP: If your material map isn't transparent, don't use transparent=true! Setting bothsides=true, and transparent=true has the effect of flipping the normals and creating other artefacts.
I tested with the primitives example, and it proves the point. http://videometry.net/broomstick/Prims.html Whether this is a symptom of Away3D 4 being in alpha, Molehill being in alpha, or just "the way it is" time will tell. In theory you should be able to have a material with alpha channel, visible on both sides of a plane, without this occurring. For now it's a gotcha worth knowing :) All sources have been updated and available for download here: http://videometry.net/broomstick/WaveModifier.html
