Hey Adam,
In addition to what @Aiph5u mentioned above, I have to ask if the the finish cut on the registration holes perhaps cut oversize, regardless of positioning accuracy? If you left, say, 0.010" [0.25mm] finish stock, then the combined X-Y error would have to be in access of 0.005" [0.013mm] to create the ‘winking’ effect shown.
Could you visibly see or hear that the cutter was not cutting a complete circle on the finish pass?
