Well, once again persistence pays off and I got it working.

Not going to list them all but it feels like I tried every combination of MaxTransfer value and jumper setting (and saw every possible error message), before finally settling on a solution that would work.
Here was the winning answer, for anyone who comes across this post in the future:
- GVP controller with internal Mechware card reader, SCSI ID 1 and termination jumper on, 4GB Transcend "x133" CF card in the PCMCIA slot using included adapter. MaxTransfer set to default of 0xffffff (a tip from Mechy) and 100 buffers per partition
- External SCSI CD-R drive, Microboards PlayWrite, that I got for $2 off ebay and couldn't find any documentation for. Configured as SCSI ID 2, removed the large external terminator, removed the "Term Power" jumper off the drive itself and moved it to the "Terminator" pins. This appears to be the change that made it finally play nice with the card reader.
Also took this time while the CD drive was out of it's housing to remove the wiring for the external audio ports, an unused activity LED and wiring, and an extra fan that had noisy bearings. Figure the increased airflow possible without the extra wiring crammed in there will offset me removing one of the fans.

Works great and I can copy files with no problems, although I still want to toss the guy who invented SCSI out a window.

Last, some hardware pr0n before I put the covers back on everything:
...working great, I love it, so what's my next project to keep me up all night cursing? Add an accelerator to this mess! Ha!