If I would have jumped in here sooner, I may have saved you some work. But you got smarter on your own, so maybe that's better!
Anyhow, these coaxial helicopters are really sensitive to tracking. When you look at the edge of the rotor blades as they spin, they have to cut one line. If you see one is higher than the other, the tracking is off and the heli makes a decent fan, but it will hardly fly at all.
You know that the upper blades can be adjusted via the flybar link. The lower blades are victims of the curvature of the blades - as you said. I suggest boiling all of the blades to allow them to return to normal pitch, and then you should be good to go.
The blades come from the factory in good shape, but when they are shipped to the US in boxes weighing several hundred pounds, you know they'll get squished. Just boil a pan of water large enough to hold blades, dump in a couple and leave them for a few seconds - long enough for them to be heated all the way through, then pluck them out and hang them vertical for a bit - in under a minute they are cool enough to hold their shape.

Here's a link to a bunch of good information. Learn it all and you'll be simply brilliant.
[link=http://www.rcuniverse.com/forum/m_7035042/anchors_7035042/mpage_1/key_/anchor/tm.htm#7035042]CX Links[/link]

Soloboss