While this might not be the true source of the problem, what you describe does seem to point to there still being too much signal. You indicated that heap mapping was done, but what software was used and how was this carried out? Where the connection speeds measured at the same time? For instance, just because you see -70dBm doesn't mean you have a good connection.
Basically, when WPA2 is in use, the 4-way EAPOL handshake must complete, as you pointed out, in a time frame measured in milliseconds, however, there are a couple of factors at play.
The 4-way handshake usually takes place at the lowest speed setting, consequently it takes more airtime to complete, but also the signal can be decoded at the furthest distance. That being said, it also interferes with other handshakes taking place at the same time on the same channel. For example 1mbps will happily decode at -92dBm, so your cell size might be much larger from a handshaking perspective than from a data transmission perspective, meaning that while the handshake could complete, the data path is no good.
You can verify this by performing data captures on the APs and looking at the reported signaling rates in the capture.
You can also look at the logs and if you spot many Reason Code 15 or 16 messages, this is indicative of the aforementioned problem.
There are fast roaming options that can be enabled on the wifi infrastructure, but you don't indicate if they are present or not, and be aware that not all client devices behave in the same way when these functionalities are enabled, but that can speed-up the 4-way handshake.
You also need to be mindful of the number of SSIDs that are being used, hidden or not, these consume airtime, for instance if you have 8 SSIDs in use, you have an overhead of 25%, and if there is even a hint of channel overlap, that can quickly go up to 100%. Anything greater than 6 SSIDs is going to cause problems, and if you can keep it to 3 or 4 you'll be in much better shape.
To answer your questions specifically:
Q1: Is there any general performance benefit to setting the WLAN to work in Tunnel mode rather than local (currently Tunnel)? No, but tunnel mode does impose bandwidth constraints on your infrastructure, whereas local bridging does not. There's lots of documentation/presentations about this available from Extreme.
Q2: Is there any roaming benefit to using Tunnel based mode over Local? No, not unless your network topology is broken and you can't fix it.
Q3: I understand the negotiation with Encryption enabled takes longer but I assumed we were talking in the milliseconds, so why would the roaming take so much longer on the devices that are travelling faster? See above
Q4: If Roaming assistance is applied in the configuration, is this likely to help the issue or am I likely to still get the dropouts as the unit switches between AP's. Roaming assistance will likely make the problem worse. It is designed to force sticky clients to roam (iphones for example). MC devices are much better at roaming on their own.