Hi Paul
So you have used the very shortest possible servo arm, you have explored the gyro gain setting range, yet it still twitches...you could try turning down the rudder servo travel limits in the TX but this seldom works, the gyro takes over and will try to drive the servo anyway.
Let's see, does the 401 allow you to set servo travel in the gyro? I can't remember. If so, back it down and see what happens.
Your problem is caused by too much servo travel for the amount of yaw needed, so the tail wags back and forth trying to catch up.
The fact that it doesn't wag without the gyro means that your basic setup is OK.
So look for causes of the too much servo travel, like geometry, limit settings, time constant settings, revo mix settings buried in a TX menu somewhere....
--John