Since I'm not going to mill a sharp corner in the tool holder for the reason above, this left remove the corner from the tool bit instead. Since I mostly use indexed tools I just clamped the tool in my angle vise at 45* and milled just a little amount off the edge. This gives enough clearance for the radius in the tool holder and allows the tool to sit flush against the bottom and side.
For my non indexed tool bits I just run the edge along the grinding wheel just enough to knock the corner off.
|Edge milled off tool bit holder and sanded smooth.|