Hey Alan. I had a go myself at fixing the blend shapes. It took a taxi journey home to fully understand what you said! I think I got it anyway.
Am I right in thinking that this was something we kind of done in a tutorial last year?
Here's a video demonstration of what it's like before and after.
Anyway, what I did was rotated the arm half way between it's extreme pose and default pose so that the original blend shape was at it's mid point, where the geometry was penetrating the arm.
I then duplicated it twice (the left meshes). I then made the correction on one of them. That became the positive blend shape, and the other, the negative blend shape.
with the original blend shape still connected to the arm, I added the new 'parallel' blend shape. Made the negative, minus one and the positive, plus one. This added the correction to the blend.
I then positioned the arm back to the extreme pose and duplicated it. This gave me the corrected blend shape.
So assuming I've done that right, does this new shape become the one singular blend shape for that particular arm movement? It seems to work better now so I assume this is the right way to fix it. Please give some feedback, if this is what you mean.