Thanks for your help everyone. Just wanted to report back some success (I think).
I replaced my 8520R2 CIA chips with a pair of 8520A-1
Double click and clock is working, however running Amiga Test Kit still reported the same faults as before.
I decided to updated Amiga Test Kit to the latest version and it now reports less faults however 2 FAIL errors remain:
I'm happy mouse and clock is working correctly so maybe I'm being pedantic. Should I be concerned about the Amiga Test Kit results or should I just get over it and enjoy my new Amiga 1000?