Borrowing the idea from the NHRC-3.1 CTCSS mod I decided to do the same for the VK5DJ controller.
The same idea applies, but with a slightly different interface.
We take the mute gate logic from the PIC here, which is pin 13 of the 4066 device. This logic signal goes high when the mute is open, so we use this to drive the base of a NPN transistor to enable the encoder.

The C1000 encoder is modified similarly to the NHRC-3.1 mod. This time we pull pin 12 low to enable encode rather than driving pin 13 high

The picture isnt very clear, but it shows a NPN transistor connected between pin 12 and ground. Ground is taken from the bottom of the output level trimmer. The base has a 10k resistor, this then makes its way out to pin 13 of the 4066.
Thats it, simple. The CTCSS encoder will now only run when the mute gate on the controller is open, regardless of any other mute activity in the receiver.