Thanks for the suggestion duaneh1. Your suggestion is the first thing I thought of as well, but the flybar moved freely.

The problem turned out to be unbalanced lower blades. I thought that would have just caused vibration, but apparently not. I brought the heli to my LHS. The guy there flew it and agreed there was a problem, but didn't know what it was. When he held it up and spun the rotors at low speed, we could see the outer shaft wobbling. He thought it was bent, and recommended I buy a new outer shaft. After I replaced the outer shaft though, I could still see it wobbling, plus when I rolled the old shaft on a flat surface, it didn't appear to be bent at all. When I tried spinning the motors without the rotors attached, then the shaft didn't wobble at all, so I concluded that the rotors were the culprit. The blades were not damaged at all, but I had replaced the lower blades, and I guess the replacements weren't balanced. By adding some scotch tape to the tip of the lighter blade I was able to get rid of the wobble, and now the heli is much more stationary in a hover.