Bingo, thanks so much! The only change I have made is to comment out the
"zle .send-break" in the fake-accept-line() so that the content of the line
is not echoed back on hitting down.

There are issues with slightly more complex management though. "test 111"
<down> "test 222" <up> <enter> then there's no more "test 222" in the
buffer. Also "test 123" <down> "test 789" <up> alter "test 123" to "test
123456" <down> <enter> (on "test 789") <up> <up> gives "test 123" still.

But still, the basics you have provided will be a great help to myself, my
coming from a much longer history of IRC usage than bash/zsh usage :)

P.S. I'm basing the behaviour on Irssi.

P.P.S. I stuck this in the wiki -
http://zshwiki.org/home/zle/ircclientlikeinput