Looks like I didn't search enough for a solution before posting.
After posting the above I noticed a similar thread in the "More Like This" section https://community.mcafee.com/message/172595#172595
It isn't so much a fix as a change to the way HIPS works. (changed from version 7 anyway. Interestingly I found that a manually created rule to allow loopback via the 127.0.0.0/8 subnet allowed the access ok, but if I specified a range of IPs, like 127.0.0.1-127.255.255.255 then it wouldn't work!