Third part software (windows) is here.
Nice, works just how I wanted - holding down one of the small buttons makes the ball scroll in both directions.
Would be good if you could adjust the horizontal scrolling speed, but it's OK like this.
It did play up a bit in IE 8 when I did a test, but who uses that eh?
I never looked into how the scrolling was supposed to work. If it's how you say, forget it - clicking and dragging is hard enough.
Logitech's software needs you to push a button as a toggle. Then the ball acts as Universal Scroll (moving ball causes scrolling) or AutoScroll (moving ball causes continuous scrolling in the direction you moved.)
Universal Scrolling is the "normal" type I wanted, but (1) you have to toggle the feature on and off, and (2) it sometimes failed to scroll horizontally in some apps.
The software linked above fixes those problems.