Thanks for the speedy answers!

And here's my main point of confusion - and the reason why I'm more interested in using Oyster than using a paper ticket purchased from SW Trains. I already have a PAYG Oyster card, so I took a look at adding a travelcard on my card through Oyster's website. When ordering a travelcard it specifically asks for 'start zone' and 'end zone'. Whereas with a paper ticket I know from experience that they'll require the ticket to cover all zones the journey will pass through, with Oyster they seem to be disregarding any zones outside of those contained within the start/end points. Which obviously makes it cheaper for me - by about 150 pounds per year as well (price is same if I include zone 2 for the via Clapham route, or zone 6 via Kingston). From my point of view I only want to get from A to B without getting off in between, and the route they choose to take me is of no consequence to me. Well that's what I'll argue in court anyhow!
I guess the times this'll cause a problem is when things go wrong and I have to use an alternative form of transport - probably bus/tube. But my PAYG card will kick in then and cover the journey?

This leads to a further question which probably (hopefully) goes without asking - I'm guessing the travelcard takes precedence over the PAYG card for journeys within the travelcard zones? None of this seems to be written down anywhere obvious so there is plenty of scope for ambiguity.