Tool Radius Compensation Usage?

What is the correct setup and usage for tool radius compensation? The manual and post examples don't cover the topic very well. I'd like to set it up to use compensation values stored on the machine.

This will only work for 2D-Profiling.

1) Go to madCAM options / 2D Options and click the "Allow Radius Compensation Output".

2) From the 2D Profiling dialog, use "On curve" and "Radius compensation output"

You also need to define the code for radius compensation in the post processor. (See example below)

//MadCAM_POST_2014-01-22
*VERSION*
5.0_131211
*FILE_NAME*
Gcodes with arcs
*FILE_EXTENSION*
txt
*FILE_DEST*
c:\postfiles\
*FILTER*
0.01
*OUTPUT_WIDTH*
0
*OUTPUT_DECIMALS*
3
*SCALE_X*
1
*SCALE_Y*
1
*SCALE_Z*
1
*AXIS_1_CHAR*
X
*AXIS_2_CHAR*
Y
*AXIS_3_CHAR*
Z
*PLANE_XY*
G17
*PLANE_XZ*
G18
*PLANE_YZ*
G19
*ARC_RADIUS_CHAR*
R
*ARC_DX_CHAR*
I
*ARC_DY_CHAR*
J
*ARC_DZ_CHAR*
K
*ARC_CW_CHAR*
R
*ARC_CCW_CHAR*
R-
*RAPID_MOTION*
G00 "x" "y" "z"
*LINEAR_MOTION*
G01 "x" "y" "z"
*CW_ARC_MOTION*
"plane" G02 "x" "y" "z" "r"
*CCW_ARC_MOTION*
"plane" G03 "x" "y" "z" "r"
*RADIUS_COMPENSATION_LEFT*
G41 D"tool_radius_compensation"
*RADIUS_COMPENSATION_RIGHT*
G42 D"tool_radius_compensation"
*RADIUS_COMPENSATION_OFF*
G40
*SPINDLE_DIRECTION_CW*
M3
*SPINDLE_DIRECTION_CCW*
M4
*CUTTER_REFERENCE*
TIP

*FIRST_MOVE*
(First move---------------)
"plane"
"motion"
(---------------First move)
*END_SECTION*

*RAPID*
"motion" (---------------Rapid)
*END_SECTION*

*RAPID_APPROACH*
"motion" (---------------Rapid Approach)
*END_SECTION*

*RAPID_RETRACT*
"motion" (---------------Rapid Retract)
*END_SECTION*

*APPROACH*
"motion" F"feedz" (---------------Approach)
*END_SECTION*

*FIRST_CUT*
"rcomp_on""motion" F"feed" (-------------First cut)
*END_SECTION*

*CUT*
"motion" (-----------------------------Cut)
*END_SECTION*

*LAST_CUT*
"rcomp_off""motion" (------------------------Last cut)
*END_SECTION*

*DRILL*
"motion" X="_axis1" Y="_axis2"
G81 Z"drill_top" U"drill_bottom" B"drill_stepdown"
*END_SECTION*

*TOOL_CHANGE*
("toolname")
M6 T"toolnr"
"spindle_direction" S"speed"
*END_SECTION*

*TOOL_STOP*
(Tool Stop)
G40
M5 M9
(-------------Tool Stop)
*END_SECTION*

*PROGRAM_START*
G00 G49 G40 G80 G50 G90 G64
*END_SECTION*

*PROGRAM_END*
M30
*END_SECTION*

*LINE_START_NUMBER*
1

Is there a way to simulate cutter compensated tool paths accurately?