Finally fixed this after several hours of forum searching and trial and error (the documentation on the client scripting side of things is virtually non-existant). You need to call 'FocusDocument' prior to doing the paste as the editor window seems to lose focus.

i.e.:

   function test()
  {
    var ed = document.getElementById('<%= Editor1.ClientID%>');
    ed.FocusDocument();
    ed.PasteHTML('this is a test');
  }