First of all I must admit that my interpretation is rather "home made",
based only on an Eliot seminar I did as a student some years ago. Still:


 >What happened?

 >  Since one would expect a romantic, late walk in a flower garden
between two
 >lovers to lead to a physical encounter, it is reasonable to assume
that this
 >is what happened "when we came back" from the garden. His hair was wet
 >from taking a shower in preparation for a physical evening) and his
arms were
 >full (of the other person, in an embrace?). So far, nothing unusual.

Well, do we _need_ anything unusual happening at this time in the poem?
I would clearly go along with your sexual reading of the passage. Even more
so, I would argue that the reader is witnesses to a post coital scene here.
("Neither living nor dead" can be read as a reference to sexual
consummation, as well as "my hair wet" and the imager of the "Hyacinth"
The "Yet" is to point out the difference between the feeling experienced in
the beginning of a romantic relationship (with maybe only a hint of
sexuality) to the point after the so called fulfillment, which turns out to
be a rather depressing experience. After having lived through ecstasy, what
is finally to be found is silence. Waht is more, the reference to Tristan
makes clear that the relationship is obviously over , what remains is being
alone : "oed und leer das meer".

Also, with lines from TWL given here, T.E. Hulme's poem "Conversation"
to mind:

Lighthearted I walked into the valley wood
In the time of hyacinths,
Till beauty like a scented cloth
Cast over, stifled me. I was bound
Motionless and faint of breath
By loveliness that is her own eunuch.

Now pass I to the final river
Ignominiously, in a sack, without sound,
As any peeping Turk to the Bosphorruos.

Not only the images, but also the turning of emotion (which the "yet"
implies to my reading, in the TWL passage above), is quite similar.

So I do not quite go along with you when you say:

 >  The 'yet' alerts the reader that this physical evening was "charged"
in a
 >way that **would not be expected**, in fact, charged in a way that was
 >expected by the narrator himself.

The "yet" can be also a quite normal, but nonetheless sad occurrence,
the changing of emotions, as described above. Taking in mind that much of
TWL is woven around seemingly trivial details or experiences, I do not see
the something really unusual, neither unexpected happening here.

But this  is not necessarily a contradiction to your reading that

 >I think the 'emotional charge' came from
 >the narrator confronting his feeling of love and sexual attraction
 >('Paradiso-like' feelings) and feelings of disgust and self-loathing over
 >homosexual guilt ('Inferno-like' feelings), enormously contradictory and
 >overwhelming feelings that appeared in an instant, in a 'moment of

Although the sexual encounter here does not need to be a homosexual one
can be, give the mythological context). But feelings of guilt can also
from a heterosexual sexual contact, can they not?

 >   Am I making sense yet?

Is my response aiming at what you wanted to say  ;-)