Steve, I think you are right. I too suspect the height valve and /or the return from it. It makes sense that a little backpressure could free up a sticky valve that is passing too much return fluid.

I won't have time to work on this for a few days, but when I do I'll let you know what happens.

PS. Oxymoron's address to download the hydraulic suspension troubleshooting guide and flow schematic is a must for anyone with these kind of problems. I had tried for a long time to get a complete description of the system, and until yesterday had no luck getting one.