[Proj] Dataset mismatch?

[Jarrett L. Redd]

Howdy...

Please forgive the long cross-posting.  I'm new to this and don't know exactly
who will have a possible answer for this issue of mine.

I'm a volunteer working on a avalanche terrain and runout mapping project for
potential use by our mountain search and rescue teams.  I'm using DRG 24k
topographical geotiff slices in UTM NAD27 and then processing 1/3 arc-sec
elevation .adf files in lat/lon NAD83 to match up and plot slopes and such. 
All this is downloaded from the NED seamless website.

Problem is, the two data sets don't match up precisely.  That is, the features
on the topo seem to match up precisely with elevation data in some places and
not so precisely in others.  At the worst, the error is around 500 feet.  I'm
using "libproj" to convert coordinates between the two datums.  I'm currently
processing a section of Colorado, and I'm building "libproj" to include the
"conus" correction file.  I've also verified my coordinate conversions are
correct by comparing against openEV and topoUSA.  I'm also using "libgdal" to
pull out the elevation data and "libgeotiff" to grab the image raster data and
geo tags.

However, like I said, I'm new to this.  I'm converting the NW and SE corners of
the geotiff into NAD83 and then interpolating for each pixel to match up with
the elevation data using the origin and resolution of the various elevation
pieces.  I have a sneaky feeling that life isn't that simple.  Am I missing
some fancy projection to correct for curvature of the earth or something?  Or
is this just an inherent mismatch between the data sets?  Or both?  Other
suggestions to try?

Please don't suggest using a commercially available mapping package since we
have no money and I need to do very extensive data processing once I have the
data sets matching up properly.

Thanks.

-Jarrett

P.S.  Here's an example of a nearly 500 foot mismatch error:

A tiny rock spire on the topo map:
13 0394704 4334970

And the corresponding spike in elevation data:
13 0394571 4335039

[Coords provided by OpenEV cursor]

I don't expect a perfect matchup, but the worst areas need to be corrected
somehow to make the avalanche terrain maps useful.

I can email an example image showing the error if someone is really interested.

Thanks again.