Its been a while since I have driven a Mk1 Jazz, but the switch on the ignition barrel detects the key being inserted into the lock barrel. This is connected to the meter, whether it turns the meter illumination on or not I cant say, someone with a similar grade/model Jazz may be able to answer that.
From your description, I dont believe you have a problem and it is completely normal and perhaps you just did not notice it previously.
I don't think he has a problem either, that's exactly how our 2008 Jazz behaves.
1. When you unlock the car with the fob, the interior light comes on.
2. When you open the door, the instrument backlight illuminates at half brightness.
3. If you insert the key, the instrument backlights fade up to set brightness.
4. Remove the key and the backlights fade out to off, re-insert and the backlighting fades back up to set brightness. You can repeat this as many times as you like.
5. Turning the key to position I (accessory) illuminates the rest of the dash backlighting, including radio.
6. Turning the key to position II (ignition) illuminates the ignition lights and starts the self test.
All normal, certainly on the later (06-08) Chinese built cars. There are a few differences electrically to earlier models, so it is possible that the behaviour is also different.
