Thanks shakalnokturn, I appreciate the input.
Although it could be a simple diode, in your situation I'd be fitting a 5.6V zener just in case.
Yes, that makes much more sense. It did cross my mind while having a coffee after I posted the question ... but in my mind I was questioning the use of such a tiny diode.
Would I be better to use a 1 watt version perhaps?
The diode may have saved the micro from a failed 5V regulator, the question I'd be asking is what could have happened on the power input in the first place to kill the regulator and what may be added to prevent it from happening again?
Again, you're probably correct ... I had been thinking more along the lines that the diode failed ... and that overloaded the regulator and killed it.
All I can say is I'm really thankful the diode held up and didn't allow excess voltage onto the micro boards as otherwise this may have been a write off.
Another reason perhaps to use a 1 watt zener.
I actually changed the main power supply about 18 months ago ... when it came in to replace 130 or so leds that had failed. It was already 10 years old ... so thought that was good insurance. Mainly because I was worried about all the electros being pretty aged ... and in a metal box out in the Aust sun for all those years. Should have changed the 5 volt reg as well obviously.

As for the TO3, either you have a customer that likes to pay a lot of cash for little, or going by your current figures you could throw in something more TO220 like...
I had considered a TO220 version already ... but when I started to think whether I needed to add a heatsink ... and what else could go wrong ... I figure I'll just pay the money. They had to hire a cherry picker to get the sign down ... and will need to repeat once it's fixed ... so not really a lot extra ... just a shock for me to see the price.
Thanks for your input too gamalot ... that adds weight to shakalnokturn's comments.
I've been working on my own too long ... need input from outside regularly.

Thanks guys.