I have also had some success:
CONFIRMED: This is not a Sme-Server bug.
What I did:
Disabled remi-php (set to default) for dysfunctional ibay and globally. Ie; use Sme-Server default php version.
php -v: PHP 5.3.3 (cli) (built: Mar 22 2017 12:27:09)
Copyright (c) 1997-2010 The PHP Group
Zend Engine v2.3.0, Copyright (c) 1998-2010 Zend Technologies
This (native php version) is NOT a mistake. Did a Sme-server netinstall (about 2 months ago), applied all updates yesterday. The only php related changes were installing scl-php.
My best guess as to what was happening is that when apache reconciles all config, swapping in php-remi redirection, php related settings such as "AddOutputFilter includes .php" are not passed to remi php.
So, this is NOT a php version problem, but an attribute if how php-scl does its redirection and not accepting previous apache related configuration.
Since native Sme-Server php is adequate for my legacy sites, I will not pursue this further until Sme updates (php) break things.
Once again, thanks for your help. I found this "problem" to be extremely counter-intuitive and, your due diligence suggestions to be extremely necessary (although annoying - my hubris).
I am not sure if you (Sme team) want to follow up with the php-scl team with what I consider a bug.
Regards;
Bill