Am I correct here - or have I got the wrong end of the stick?
You are correct.
I expected to find more info on this than I have been able to. Is it not quite a common issue?
It is not too common as normally component modules connected together are through pins that have some sort of protection in the form of series resistance, or input to an open collector transistor. However it is very common when trying to design circuits that have sleep or power down mode.
If you do have a problem then an open collector output is a good way of stopping latch-up.