Ok - got to the bottom of the problem. There were some minor differences in the @forge/bridge and @forge/react versions in the package.json for the primary app React app compared with the modal React app. When these were aligned (amongst some other settings) it works fine. The git change log can be seen below:
The modal documentation should emphasize that the versions need to be aligned, because the resulting error is very obscure and hard to diagnose the root cause.