Making progress
Terry wrote a ATC macro for me. Unfortunately the computer in the mill didn't have enough HP to run it properly so I had to switch it out. After that it was great. Still a few tweaks need to happen but all and all it works great. The rigid tapping seems to be working really well. This is a test in plastic. Monday is the real deal! It's in a tension compression holder and you can see it really tracks well.

http://vid1086.photobucket.com/album...psxqrpyhul.mp4

The quality is a little crappy. I'll try and upload a better one later.

Edit: HD version on Vimo