no signs of fungus, and no red anywhere else on the fish. It not swollen, just red, and yes could be bleeding. it is feeding well, swimming fine. havent checked the stats yet, just noticed the symptoms. All the ottos and other fish get on well so no damage from other fish likely.
Its only a 10g tank, contains ember tetras, honey gourami pair, the ottos and some rocket panchax. Everyone else is absolutely fine. its a strange one, One thought i did have was could it have sucked onto the heater and burnt its lips? thats what it looks like!