Strider, 
I read through the thread but didn't see mention of the rate-of-twist for your .40 cal. Hepburn. Did my short attention span miss it? You may be shooting bullets that are too long for the twist.

Reason I say that...my early .40 2 1/2" Rem. Hep. (SN below #750) has a 1-in-24" twist and can shoot well to 150 yds. with #403169 (nominal 253gr. w/1:30 alloy) Using only its open barrel sights, I have gotten a couple of groups measuring 1 1/8"-1 3/8" from the bench at 100 yds. with that bullet and various brands of black powder and tiny priming charges of SR-4759. In that rifle, heavier bullets perform in a similar manner to what you are getting - and generally begin to destabilize at ranges approaching 200 yds. I'm very happy with my Hepburn just as it is and relegate it to hunting and 100yd. plinking fun. It was never drilled-and-tapped for a tang sight, so probably left the factory as an "express" rifle.

I've owned this rifle twice since 1973 - it was the very first single-shot I ever traded for. It came to me with a Remington 340gr. grooved bullet mould, Remington loading tools, and a goodly supply of berdan cases....and I ran into the same bore/chamber issues you've experienced. Frustration with all that, plus brass and berdan primer availability caused me to trade it off to a good friend -- but retrieved it again ~ 6 years ago.

This time around, I started over with Buffalo Arms' "stretched" .30-40 Krag brass.  The lengthening process creates thinner necks than 405 brass, and will receive properly-size .408" grooved bullets just fine! That plus the other benefit that BACO bumps-up the thickness of the Krag rims to proper headspace in the original .40-65 Remington chamber.

I admire your desire to get your Hepburn back to shooting paper-patch bullets!  Just thought I'd pass on some of my Rem.-Hep. successes.

xtm