Finally got my modded Jaycar/SC theremin working yesterday. It had always sorta worked, but never properly. After I first built it, I messed with it a bit, put it in the cupboard and dragged it out once in a while to fiddle with it but to no avail.
Yesterday, though, I finally cracked it. I realised that the 7805 regulator and the diode on the regulator's ground pin were the wrong way around (insert embarrassed expression here). Once I put them the correct way around, it fired right up. The setup went smoothly, with all the voltages reading correctly according to the manual. I'm sure the pitch is not great in terms of linearity and the volume only has a small working range, but at least it's working and usable.
Sounds like utter cack through the little speaker that came with the kit, but the sound from the line out is not bad at all. The last thing that remains to do is drill a hole in the top of the box so I can adjust T2 with everything in place - the pitch increased markedly with the lid back on but re-adjusting will be easy once I have access. I'll probably add a switched jack between the LM386 amp output and speaker to use as a headphone jack (and cut off the speaker signal when the 'phones are plugged in), too.
Just thought I'd share :)