Pin 5 goes to the temperature gauge on the dash. On the other side of the gauge is the voltage stabiliser which I believe is mechanical and oscillates to regulate the voltage. Maybe that is what you are seeing.
So, if you found 12V at pin 28, then Rover Mini specific wiring diagram is wrong. It shows pin 29 as relay power and 28 as earth.
The different temperature readings with the IAT sensor plugged in or not, are probably due to some residual voltage left (from the 5V) in the ECU that disappears when the sensor is plugged in. I essence, the sensor act as short to earth/ground and the voltage goes away.
Craig, you have done an excellent job troubleshooting this issue by being very methodical, logical and thorough, even when I misled you. dbcool20 has been very helpful too by confirming information on a good system.
Cheers to you guys,
Ivan