[DaNIEL MeNTED]

Think I figured it out - there's a duplicate bit of code @ the bottom of the template:

PHP Code:

<if condition="$show['spacer']">
    </div>
    $spacer_close
</if>
<!-- / post #$post[postid] -->

<if condition="$show['spacer']">
    </div>
    $spacer_close
</if> 


But there's only 1 instance opening a div at the top:

PHP Code:

<!-- post #$post[postid] -->
<if condition="$show['spacer']">
    $spacer_open
    <div id="edit$post[postid]" style="padding:0px 0px $stylevar[cellpadding]px 0px">
    <if condition="!$post['islastshown']"><!-- this is not the last post shown on the page --></if>    
</if> 


So... removing the duplicate from the bottom fixes the inability to multi-quote beyond the first post, and also fixes the quick reply button.

I'm not 100% sure what the $spacer_open part of the code is supposed to accomplish - I find if its there at all the size of the postbit+post - shrinks.

I'm guessing maybe there's a spacer variable defined somewhere?

In any case... this is a great starting point.

Thanks Shazz!