It always happens that I'll get something working with the test case and then find a broken case shortly thereafter. A problem I'm coming across with the vertebra based skin deformations is that I'm running into problems when the 'spine curve' starts out closer to the skin in the out part than in the in part. As a result, the extruded skin doesn't match up with the in part skin as well as it should and edges match up offset by 1. Additionally, the curve of the skin has a big bump at the connection. I've thought of 2 solutions to this, I'm not sure which to pursue.
1) Move the border verts to be the average of the immediate vertex neighbors on the in and out parts. This would smooth out the transition and would probably help correct mismatched edges if, as in this case, they are only offset by 1. However, since the border is ideally situated where it should be based on the in part, I fear that, while this would work, it wouldn't exactly be correct.
2) Find the point on the curve that is closest to the center point of the border vertices on both the in and out parts and then get the vectors between these points. Offset the movement of each of the edges by interpolating between the two as you traverse the curve adding edgeloops. This one's a little more complicated and I'm sure there's some problem that I'm not thinking of, but it seems like it might yield more "correct" results.