Martin
I don't think anyone is suggesting that a digi caliper isn't capable of measuring accurately to get within the near .002mm (.0008in) difference you state but as someone well versed to working to 0.002mm at work a caliper just wouldn't be given consideration to work to. The flats are there of course but their effect is I agree very small. That they are accurate is not at dispute but they are not an instrument that will give consistent readings and particularly so when used transverse to the lathe. The problem arises to me (and yes I use Mitutoyo calipers on a daily basis) as to which result is chosen if working to fine limits. If an accurate measurement of anything – lathe or mill – is required then it is not the instrument I would chose if a micrometer is available. Obviously if it's the only instrument available then choice is not an option.
There remains of course the inability to measure any further than the length of the internal jaws and of course the impossiblilty of measuring a bore inside a crankcase for instance. A plug gauge will tell you two things – if it's fit is correct then not only the size sought but any degree of taper too – something a digi caliper in even the most careful of hands cannot do
As always it's 'horses for courses' and it's down to indvidual choice – the original poster was obviously taken by surprise at his extra 4 thou being removed which in all probability on aluminium was due to a wrong movement of the dial, possibly based on an incorrect reading and not push off and then dig in as can be on some materials.
As John above aludes lapping is an option but not something that should be neccesary on such an op as first described.
All I've said on the matter is with the best of intentions to those with limited knowledge of the subject – not to teach Granny etc
Regards Tug