OK I've made a few tests according to everyone's suggestions.
First of all, Fred, you said maybe the transformer was shorted due to overheating or underwinding. I measured the resistance for pirmary/secondary, and came up with: 733R : 17.6R. Very close to the datasheet. So I don't think it's shorted. I do trust this ratio transformer is fine simply because Andreas suggested it as a working design, and others here have had good success with it.
Pip, to the DC on the primary: nada, zilch, zippo. We're cool in that regard.
Fred you suggested I pump a 1K sine wave into the grid and measure the output, if I understood you correctly. I did that, at 1V RMS. Output across XLR pins 1-3 was 1.6V; across XLR pins 1-2 it was 1.3V. Not sure why the differential; I would have thought they would have been the same. Not sure how to interpret the numbers either.
O3m, I played with the bias point, paralleling a variety of resistors across the 15K top voltage divider resistor, and found that at -2.23V bias it sounded the least distorted and the best.
But
I've worked with many microphones, and this still has a weird buzzing sound that is unpleasant, and noticeable. 2 other singers commented on it, liking my "other" mic better (M49 clone). Indeed that mic takes much higher SPL's and it sounds gorgeous.
So I'm not sure what to do from here now. Andreas thought I was simply overloading the mic pre. He was right; it does go into clipping on my preamp before it clips in my DAW, but a lot. So I turned down the gain on my premap. Voila, no distortion.
HOWEVER
The sound is dull, lifeless! Not what I would expect from a clone of the "world's greatest microphone."
I will probably redo the rest of the resistors, and also sub in a new resistor for the 15K to get bias to -2.23V, which is an equivalent of 14K. Not too crazy, and and easy fix too. But it's not sounding like a $10K mic, or even a 2K mic.
Exasperated. I may have to send this to someone, unless you gents have other good suggestions. I am replacing the capsule - getting it reskinned, since I biffed the back side. Ever so possibly it's the capsule, so I'll know about that in a few weeks after getting that going (only sent an email to Thiersche, so it' gonna be a while).
I'm exhausted today and not sure I'm up to subbing the capsule as Matt suggested; I may try. Just dunno of I wanna solder anymore.
Thanks everyone; I'll keep you guys informed as to progress/lack thereof, and thanks for any more thoughts. At least I think we can rule out the transformer (?).
Best,
Mike
Edit: I checked. I do have a cheapie chinese clone capsule, but it's too big to fit the M7 holder. Not even gonna go there.
Hey, anyone in the Southern CA area feel like hanging out and helping a buddy fix up some flubbs?
Thanks guys,
Mike