My 5th attempt at isolation milling the PCB was finally a success. After experiencing just about every failure mode, here's what I learned.
First, be sure you've calibrated your milling tool. See "Calibrating PCB isolation routing with Eagle/pcb-gcode" by Poul-Henning Kam. He created a simple PCB design that mills traces of a particular width across from isolation paths of the same width. Compare the two - if they are the same width, you are good to go. If they are differing widths, then your bit is either too deep or too shallow.
Second, is your table surface 'flat' in comparison to your milling tool? Mine was out by just under 2 mils, which is a lot, considering 1 oz copper is only 1.4 mils thick. To test, I took one of my mill bits and inserted it upside-down in the Dremel. I moved the tool to each of the four corners and found the highest corner. I use an axillary 9 x 12 inch "sacrificial" board to which I attach my PCB stock to - with double-sided tape - so that any drill-through would not damage my router table. To the underside of each corner of the sacrificial board I added 10-32 tee nuts, countersunk slightly. Into each I used 10-32 x 1/2" set screws with a hex-head. Update - a machinist friend of mine advised me to have have two set screws on one side and only one setscrew in the center of the other side - forming a tripod. This makes adjustment super-easy and much faster than one adjustment screw in each corner.
I repeated the leveling exercise, again starting at the highest corner, and using a feeler gauge - update: I have since converted to a dial indicator - about 10x faster - I lowered the set-screws until each corner was lifted to the proper height. I kept gentle clamping pressure on the board so it wouldn't move during the leveling process. The thickness of the feeler gauge is not important, just use the same thickness gauge everywhere.
Finally, align the PCB square on the routing table and test by moving the X or Y axis along one edge of the board - I use the point of the router bit as my reference. Adjust the PCB (carefully) into square. Update - it is important to adjust the PCB to be 'square' against the path of the router, not square to the table as shown here.
Now we're ready to route.
Next post I'll cover what I learned on the Eagle CADsoft PCB design software.