Ah, the "context" menu...that's the trick. Got it, assigned the FM record function to /recording/FM. Bingo, works fine. I don't have an SD card in the thing, but I would assume you can do the same thing and record to the card, so I can shove in a huge microSD card (the terms are fun, aren't they?) and record for eons, right?
Seems I can go for about 5 hours on a full charge, and when I plug the Clip into an external battery, I should get much longer record time. Of course, FM reception goes to pot doing that, probably related to RF crud on the USB battery connection.