Thanks all for the advice. I've finally had success with the matt varnish.
I applied the first coat in satin as that didn't have the bubbling issue. I let that dry for 5 days - this was unintentional, i just got caught up with other things. Was only going to be 24-36 hours.
Applied the matt finish over that satin, slightly thinned ~10% and it went on just like the satin, no problems at all. The blistering clearly was due to lifting the not fully dry under coat.
It's all kinda irrelevant for the job i was doing now, since the customer chose to go with Danish Oil anyway.. which i'm quite happy about. But i'm glad I went through the process and got the experience. If it had all worked first time, i wouldn't have learnt anything.. :U
Cheers