Go Z-0.031 for depth or maybe a thousandth or two less to prevent the top edge of the tool from creating an undercut along the top of the corner.
As for the amount of the offset, it depends where your geometry is drawn. IF the geometry overlies the original sharp square edge, then the tool diameter would be .188 (or a tad more) as you described above for full radius compensation.
I do not think the tool will perform well in the vertical plane at all. For that you'd need a different approach using an angle milling head, or else interpolating the corner radius with several passes cut with a ball mill.