Had something of a breakthrough yesterday. After some research on wikipedia it was discovered there has been an alternate driver out for this type of application for some time.
1. Deleted printer with foomatic (iwhi) ppd file
2a. Re-installed printer with CItoh M8510 ppd file obtained here:
http://openprinting.org/printer/CItoh/CItoh-M8510
Left all settings (Baud Rate, Parity, Data Bits, Flow) as default as from beginning.
No filter failure, but it printed garbled stuff.
3. Researched Apple Imagewriter II specs on Apple website. There is a 45 page pdf in there, on page 23 it states:
3a-Baud Rate = 9600
3b-Parity = None
3c-Data Bits = 8
2b. Re-installed printer setting Baud Rate to 9600 along with other settings.
Printer now works.