My R2E3 uses NMTB 30 tool holders, the ones I presently have are of the DA collet type. My problem is that the best ones have .002" runout, the worst is .009". Aside from replacing them, is it possibly to true them up? Could this be done in the machine, or better off doing it in a lathe?

Where are you measuring the runout; inside the tool holder collet chuck, or on a dowel pin chucked in the collet? If the later, it might just be the DA collets are beat. Try buying a new one (they're relatively cheap) and measure the TIR of a dowel held in the new collet..

I don't think that the tool holders can be reconditioned, at least I've never heard of anyone that offered the service.

I checked the runout both ways, on the tool holder and on a dowel pin. Most of the runout was in the toolholder. After careful study, I decided to recut the taper in the nose of the tool holder. With the tool holder in the spindle, I clamped a carbide lathe tool in the vise and cranked the knee up to dust off the slight amount of runout in the holder. This fixed the problem with the 5 large collet tool holders, but the 2 smaller ones that use 0-1/4" collets, it made it worse. The collets weren't in the best shape, but after careful inspection I noticed that the retainer nut has a tapered insert inside that seats on the nose of the collet. Both of these inserts were split, causing the collet to be pushed off center. I tried to duplicate one of these tapered inserts with a piece of drill rod and still couldn't get it to come in any better than .005". I think I will just scrap the small holders and use an ER collet chuck for smaller mills.