Jonathan D.
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Went to double check and now the chests are working normally.
Oddly, the filesize is jumping between 1mb and 4mb every time I start minecraft.
Will reload minecraft and make a new world, hopefully in a different section of my iPAD's memory to make sure this isn't just a memory problem.
I thought this was a nice feature but anyway it's there on iOS 8/0.10.4...
I have a working "save" of this happening right now and can make a backup via iTunes.
We solved it at my sons iPad. So he can play his local worlds again.
1. Backup the worlds through iTunes on a computer (just the "games" folder): https://www.instructables.com/id/Save-the-World-Minecraft-PE/#step2
2. Delete the app from the iPad.
3. Reinstall the app from app store.
4. Add the "Games" folder through iTunes on the computer. Overwrite the existing folder on the iPad.
Done.