Rev, I noticed the same problem while checkering a small portion of the prop.
What you need to remember is that the side portion of the 2D skins aren't going to appear exactly the way they appear when you view the 3D model. They are wrapped and stretched as the skin is applied ingame. If you have even, square checkers, they will become stretched (as in your pic, and in this pic):

Whe you're viewing the 2D skin, try to imagine what it will look like when it is applied to a 3D model... much like a soup label covering a can of soup. I haven't tried this and I am not sure how it will turn out in the game, but what I suggest is this:

You'll have to play around with it, but try to skew and stretch your 2D skin so it 'appears' correct when applied in the 3rd dimension.