Ok so received the 8302 chips today! Here is what I have done:
TR3 replaced
The main voltage reg replaced with a TSR 2450 to reduce the heat output
8302 replaced
The first replaced 8302, with soldered resistors, failed to boot and I was given a white/grey screen and no activity.
I replaced with another one (glad I bought multiple!) and that one did boot, but formatting is still failing

I haven't yet soldered the resistors on to this one so maybe that is something to do with it, but I am starting to run out of options!!
I also swapped microdrives around, same issue (I soldered some turned pin sockets onto them too to ensure a good connection).
Could this be a faulty ROM or something? Maybe expecting something it shouldn't be to confirm the format?
In better news the microdrives seem to be performing a little better with the newly installed parts, they seem to be spinning more positively which is good (I can still load the Quill cartridge, haven't tried any other yet).
I do have a vdrive ql now so I can load some software from external sources. Maybe there is something that can help me test the microdrives and debug the issue more
Edit: Interesting observation - I was able to load a program from a tape Rich sent me and can dir it fine too, so reading seems to be no problem. Here is the interesting thing, if I tape over the write protect notch I can write a file to the tape *but* the microdrive never stops spinning until I reboot the machine, even though the cursor on the screen starts flashing again waiting for a new command. After rebooting I was able to run the file I wrote no problem. Could this be related to the formatting issue?