Replying to my own post above because I think the problem (convex cuts from both sides of the spindle using a fly cutter) is solved.
I was using a variation on this post to square a work piece:
http://www.hobby-machinist.com/showthread.php/4629-How-to-square-up-stock-on-the-milling-machine
It appears that the work piece is rocking in my vise, causing the fly-cut to be non-flat.
http://www.micromark.com/Quick-Lock-Milling-Vise-3-1and8-Inch-Capacity,8106.html
I used a 1" piece of steel round stock between the moveable jaw and the work piece (so that the work piece would lay flat against the fixed jaw), and positioned the fly cutter so that most of the cutting stroke came parallel to the x-axis
edit/ I meant to say, parallel to the y-axis, sorry for my confusion /edit
, or at a right angle to the vise jaws. Since the moveable jaw on this vise doesn't have a hold-down mechanism like the Kurt, I think the force of the cutter was able to move it up and down a few thousands of an inch each time the cutter tip sliced into the work piece. Since the milling machine spindle center was aligned with the center of the work piece, there was a slight change in the angle of the cutter as it passed over the surface, causing the piece to tip back as the cutter arc passed 90 degrees.
Could be my theory is all wrong, but eliminating the steel round from the vise and moving the fly cutter so the spindle axis was to the side of the work piece resulted in a flat, square cut on the first try. I didn't adjust the milling machine head tram either.
Walt