Josh, I don't think you are satisfied at all with the tiller or you wouldn't have posted for help. I think you're spot-on with your analysis as to what needs to happen but are not sure about the ramifications of trying to improve it. I think you've already proved that you can bend through a knot with the upper limb.
The hardest thing to see when learning to tiller is knowing how one limb affects the other. I see a whole different picture here.
There will always be some imperfection or workaround with every stave, learn to deal with it. Knots will always be hard to deal with but they do bend, maybe not as well as we like sometimes but you deal with it like the knot just off the fade on the top limb, (can't see for sure but its weak in that area so I am assuming a little here). The knot midpoint of the lower limb may not be the main issue, I see the limb not bending past the knot (reflex) adding too much pressue to the top limb.
I took some liberties with your photo, hope you don't mind to illustrate. You may be able to get the improvement you're looking for by scraping a little below the knot in question with some additional sanding out to the tip. This should bring that bottom limb around a little more taking pressure of the top giving you a more balanced tiller. I think what you are seeing here is reflex below the knot.
You may also find after the adjustments that the knot becomes a bigger factor, if it does, scrap it too a little but only in the thick area.
This is what I would do if I wasn't happy with the tiller. Hope this helps.
gmc
