Well last night I spent some time with the DTI and realized that the inside and outside mounting faces of the wheel and the blotters were not parallel. The outside face was flat and more or less on-axis with the outside but the inside face sloped around 0.015" – 0.020" across about 2.25". So, I cut some paper annular shims, trimming and stacking them to take up the misalignment – finally trapping them between the blotter and the inside bush. It was a real fiddle to get them as close as possible.
Anyway, the upshot of this is that the wheel is now running much better. The outside rim has a TIR of about 0.005". Still not perfect but the vibration is within reasonable limits for me and I am able to dismount and remount the wheel fairly repeatably without too much trouble. I also ran the wheel for several minutes at full speed standing out of line and finally plucked up the courage to do some grinding. It worked ok.
I think that the dressing I did on the inside face helped even things up but there is still some difference is wall thickness around the outside of the cup which is responsible for the vibration.
Thank you for the comments
Jon