How high can the tolerances go? What would be the problem with just setting them there? My default is 5. I suspect part of my problem is that I'm working with such small items the size of the cuts starts to be close to the size of the tolerance.
Problem is, if tolerance are too small, you run into the other side of the coin, where lines don't intersect when they should and other problems occur. I tried going down to 1e-7 on your file but then other bad things started to happen.
1e-5 usually fixes things, but in your case, you may want try 1e-6 everywhere.
Don't forget (for now at least), tolerances are also stored in the mop templates, so you need to make sure they are all set as well.
Yes, the scale does exacerbate the problem and imperial units makes things even smaller. I did add thousandths to the drawing units, but I have not tested this much at all. I'm not sure what gcode units code it would output, but the numbers would be in thousandths. Is there a way of scaling gcode in Mach to say 1/1000 ? Just a thought. (Wished I called it 'mil' instead...gotta go clean my notebook screen now).