I've done some more forum searching and I've got a few places that I will look as starting points. I gather there is a wire harness in trunk lid for the lights and its not uncommon for one or more wires to break and short or intermittently work. This would explain the connection with the license plate light.
The second place to look it near the foot well on the driver side by the console there might be a connector of some sort where the reverse wire passes. I also need to check fuses. I looked over the list of fuses in the Bentley last night but couldn't find a fuse that involved reverse that could blow without me noticing other problems.
'94 540I 6spd/205000 miles