OK, I have created a custom.css file for the Custom Code > Custom CSS and that works. I am successfully loading both template.css and custom.css into the editor using the JCE configuration. But the Template Options ->Typography settings are not appearing.
So for example, in the Template Options ->Typography, H2 is set to a certain size and color. When I load a page in the frontend, the H2 style from Template Options is included as an inline style (H2 styled correctly). When I load the edtior, template.css and custom.css are loaded, but neither file contains the Typography template option H2 code (H2 style is not the same as in Template Options).
Are the Template Options ever compiled into css files? Have I missed a configuration somewhere?