...and were assured that drafting would not be a problem despite the chimneys relatively low height.
Just my opinion, from my own limited experience, for a short flue, I would not even think of installing the Montpelier without insulation on the liner. (The flue on mine is interior, insulated, lined and about 16'.) Raising the flue temperature significantly improves draft. Besides for UL 1777 and building code, the liner probably must be insulated. Besides, the stove has a really big door. You need all the draft you can get to stop smoke roll out.
The flue collar should be sealed at the appliance adapter on the Montpelier. Otherwise, the loose fit will lose draft. Also, if the flue collar is not snug to the insert, you will loose draft. Also, if the liner was kinked when installing, you will loose draft.
...and are hoping it was a lemon
I'm no expert, but I doubt it is a defective stove. I am surprised they are replacing it, unless they have found something major wrong. If the stove has a small air leak, you would get hotter, faster fires, not smouldering.
I was shocked that the 3 ventilation holes in the bottom were blocked and really not providing any source of air for combustion.
Those three holes only supply a portion of the combustion air. The three holes are a minor problem that should have been checked at install time. I had a very small amount of insulation in one hole. It's not a big deal. Anyway, there are only two holes feeding 3 orifices.
Any thoughts on the value of asking for a block off plate - what does it do?
It stops hot air from rising up the chimney, cooling and falling, then rising again. The Montpelier gets very hot at the top. Without it, you will have significantly more heat loss via the chimney structure.
Also, is an outside air kit a waste of money?
As far as I know, the Montpelier has no outside air provision. If you tried it, it looks like you would get lots of leaking. See this link about outside air:
Outdoor Air Myth
...we can still feel the smoke on the back of our throats in adjacent rooms.
Stoves stink during break in. Ours is enamel, the glue on the liner insulation smoked and made me feel sick during break in. From what I understand, painted stoves stink much worse: Each time you hit a new temperature high, more odor. Also, if you are smouldering wood, the heavy smoke may fall down along your roof or a wall, and be drawn in though windows and cracks. You can check for this when burning. Why don't you go get some kiln dried wood? I think you would see a big difference.
By the way, you probably do need to keep the door cracked open until the wood is charred. Wet wood may require the door to be left open most of the burn cycle (Obviously, this is not good.).