Mysteries untangling. Kevin has been very insightful. It appears lilypond uses emacs if it finds nothing set. I never would have thought of that. Not only does this explain the behaviour, but it explains why I was going nuts as well.
Next. GNOME apps like Nautilus start under Xsession, before shells and terminals and so on. You have to set environment varibales common to GNOME apps and bash in a file that cn be source early by X11, and later by bash, without sourcing .bashrc more than once.
Nearly there.
Andrew