.035" down? add this to your .040-.050" gasket and you've got a real problem with your squish! I know its easier to mill your heads, but if you ever pull the engine, consider decking the block .030". You'll eliminate this empty "pocket" in the squish area, raise the compression as much as shaving those heads, and you'll make more power.
I suppose this is typical production tolerances, but can be improved greatly.
Lots of good books on this subject.