That sounds about right re the arm. I took it around the block this morning (tried the reversing trick a few times as detailed in the link I previously shared) - no better and, at one point, the car didn't want to move at all after trying to shift (stationary) into hi then back to lo. With a bit of revving it did pull away and then drove as before in Lo.
Given that it didn't do this until I selected lo, presumably if it was fitted wrong, it may now have 'slipped' or similar?
Re clutch behaviour - it feels quiet smooth. It's a bit on the low side (ie it feels like you need to push it a far way to disengage, but I had a Legacy that was the same. Kinda prefer to it a clutch that disengages at the absolute top of the range) and improved after the replacement.
Re gear selection - never had any complaints. You could describe first as a 'little tough' but the car has got 108k on the clock and I've driven far, far worse. It's not hard to get it into 1st, just not quite hot-knife-through-butter. Even now, once moving in Lo, first three gears select fine. I haven't gone to any speed that would require a higher gear as I'm not sure that's the best thing to do...
Re smell - it was quite smelly after the replacement but has been getting better. I had this in a previous couple of cars - first few hundred miles there was a smell which went as everything settled in.
If it is the selector arm, are these a difficult (expensive) replacement? I've found a Subaru specialist around the corner from me so won't be going back to the local garage how had such a hard time changing the clutch in the first place...
UPDATE
@Mr B - I think that you've hit the nail on the head! Found this when searching for 'selector arm': https://www.subaruforester.org/threads/2000-help-my-dual-range-high-low-transmission-keeps-slipping-into-neutral.88579/.