My reference for o-rings is Parker O-rings:
http://www.parker.com/o-ring/Literature/00-5700.pdf
Parker shows precisely the geometry that I'm using.
My application is for low pressure (1 PSI or so), where a screw on cap will be removed once every week or so.
So far, if the lots of coolant solution doesn't work, the mill an 1/8 inch starting groove first suggestion will be my next try. I'll probably mill down a helical ramp taking about an inch to travel to the full .112 depth. I'm reasonably certain that will work, since the original dovetail did fine except at the entry.
Ken