Andy,
now I'm confused. Apparently, your MicroDEM lat/long view of the DEM isn't based on a lat/long Cartesian coordinate system. Such a Cartesian system, often called the Plate Carrée pseudo projection, would have fractions of degrees as the unit for their principal axes, with the same scale on both axes. You find such a map representation in Plate Carrée on various geo portals on the Web, like the NSW map server, or Toporama for Canada.
If it was Plate Carrée you would have the 2:3 distortion aspect, and not 5 or 10%. But there are many other map projections out there and MicroDEM might tell you which one is in use. Some map projections are unsuitable for prototypical route building, though. Those are designed for small scale maps. The advantage of a projection like UTM (a form of Transverse Mercator) is both being "conformal" and, in a limited range with controllable error, also nearly "equal-area/equidistant" - and hence, it's used for large scale maps and plans.
TIGER data is not very accurate, so perhaps in this particular case projection errors won't matter that much. Difficulties would start if the route builder tries to overlay Google Earth images.
MSTS is an example with a neither "conformal" nor "equal area/equidistant" native projection (it's Goode-Homolosine) but users didn't take much notice because they didn't have the means to find out - the famous marker files are very tolerant in this respect.
geophil