Ok I worked around this by abandoning trying to use a path. It's working using properties. In the host.xml file I now have defined a property in each server. Like this.
<server name="G1A" group="main-server-group">
<property name="messaging-journal-path" value="../../../../../../../../../acme/G1A-journal" />
The use of the property in the domain.xml does get resolved as expected. The directory is in the right path for each server instance.