Time to Follow up. I did make it to Miyazaki during Obon and got in a some diving. I'll post a bit here in case in the future someone is looking for info.
There are 2 main areas for diving in Miyazaki-ken. One is north of Miyazaki-shi, (nobeoka) and one south of Miyazaki-shi. I went south, about one hour by car, to the area called Nango. The coast line was fantastic and it was a nice drive. But definitely out in Inaka !
There are a few dive shops based in Miyazaki that can do trips both ways, but I went with one based in Nango called K2 dive service. They were reasonably OK and I'd use them again if I go back.
Unfortunately, the week before had heavy storms and the viz was only 8-10 meters compared to the normal (I'm told) 20-30m. The water was warm and the sites were pleasant. Lots of fish, and as you would exepct more warm water fish than in Izu. However, the bottom was, kind of 'dirty'. Not sure how to describe it, but not 'clean' like in Okinawa or Izu. It was similar to some dive spots I've gone to around Enoshima...
Overall I would say that it was good diving, definitely go if you're in the area, but not worth a special trip in my opinion.
Highlights included TWO Harlequin shrimp feasting on a starfish, some fantastic crabs and shrimp, a praying mantis shrimp. and a pygmy sea horse.... or so I was told by my guide, I actually couldn't see the pygmy. (oh, and a LOT of uni)
Here are a few pictures