The rotors were balanced as well as I could
You must static balance the main rotor before you do any more ground runs. The torque tube (M/R mast?) flexing is thoroughly undesirable. Caused by rotor inbalance, or lack of sufficient strength - probably both.
It's a straightforward but time-consuming process to align and statically balance a two-blade rotor. Align first, using the rigging nails at the tip of each blade and - assuming you're using standard 206 blade retention bolts - the correct chamfer within the hollow shank of the bolt. You'll need to get hold of the relevant pages from a 206 M&O manual to align using the standard parts, and to understand why you need FOUR datum points for alignment.
Once aligned, with both blades pitch angles 0 relative to the hub you can balance the assembly - both spanwise AND chordwise. The Bell MM shows very well how to use the special tooling (not rocket science to reproduce if you can get your hands on a set to copy) to achieve spanwise and chordwise balance.
I made an assumption, centrifugal force would align them. Thoughts or Suggestions?
Once aligned you should lock the position of each blade to the hub. The 206 uses latch bolts clamping the blade root tangs to the grip, the 47 uses drag braces. Do not rely on centrifugal force as you would with a model, the balance will probably be lost if the blades are allowed to wander about on their own. In any case, I can't see it working full size and at low Nr.
Pitch: What appeared to be a null pitch at first, after closer examination (three opinions) we agreed it appeared to actually be slightly negative
The blades are twisted along their length to equalise lift along the span. If the tip is at 0 degrees, the root will have an appreciable angle of attack. So if the root is at zero the tip will be at a negative pitch angle.
Much has been said on here about the horsepower needed to turn a 206 main rotor at 100% (394rpm). I really don't think you need anything like this rpm to 'hop' - and I mean hop - your 500lb machine.
As for lightening the blades, the mass of the blades as they are - if you can get enough Nr - will give you a good flywheel effect.
Get the rotating bit sorted out before you go any further. I wouldn't want a 206 blade falling on me, let alone one with significant rotational energy.