Thanks Adam,

I had cuteeditor.lic in the bin folder, but inspired by your answer I tried putting cuteeditor.lic into same folder as the compiled Custom Webpart library dll (ie in the obj\debug folder of the Webpart library project) - that has fixed the license problem!

The only issue now is that it's only showing a plain textarea rather than the normal toolbars - could this be because it's instanced in the Custom Webpart, so it doesn't 'know' where the CuteSoft_Client folder is?