Well I think I may have rescued my lace - I think.
I tinked back the purl row and part of the knit row til I got to the offending area - very blurrily captured here - notice how I've managed to use the macro setting to exquisitely detail the pattern BEHIND the stitches I wanted to show!! hehe oops!
But now that I've knit on something just doesn't seem right.. I think I'll need to sit down with it, in good lighting (not bedside table lamp lighting) and see if it all really IS ok :)