Hi Laura,
Just like in clicker training, we can get extinction bursts in CAT.
I would say that no, you did not need to increase the distance.

What you need to do is let her know that that behavior is not what works.

When you see this as not engaged what you may actually be seeing is a
testing
process. The horse doesn't really believe what has happened up until now.
She's
likely as surprised by her feelings as you are.

So, she falls back to what worked previously to see what happens. Will the
other
shoe drop. That's the time for you and your decoy to stay compeltely
unemotional.
Just wait. If she gives distance, you've got to decide if leaving is better
than ugly faces

From her history, I would say that it is. I say this especially because you
wrote
"As an experiment I did about 5 minutes of CAT with her in the pen and me as
decoy using the same approach run but with one hand slightly extended, and
she was touching my hand nicely, but then walked to the far side of the pen
and stood for some minutes *yawn* with her butt to me. Then she turned and
quite briskly walked up and touched my hand again."

I love this decision that she made. The yawn is a release of tension. Most
of us would be inclined to click the hand touch. The touch of your hand is
not clickable.
What it is rather is an invitation to play. So, offer her something
clickable next. And, that c/t can still be a touch. Very hard to wrap your
head around this. But,
this distiction is very important. She came to you because you gave her
control. OK, she said. I'm ready. Now, you can do a c/t behavior

Dolores Arste
Author: Conversations With Cadbury
www.zenhorsemanship.com
Find us on Facebook: www.facebook.com/dolores.arste