Mission accomplished. I think I've got it under control now after carefully checking each and every possible cause. After adjusting the o-ring in the bottle cap, I thought I had it. Not so. Apparently this particular Reo/RM2 setup just needs more than one o-ring. Ended up with 3.
The one you normally place around the connection in the catch cup. Another on the milled part of the RM2 so that it sits at the top of the catch cup and still another on the bottom thread of the RM2 itself.
Crazy but it's all good now. I'm REO for life since getting my 1st one in April! Love, love, love REOs.