Hi Brent. The groove for an "O" ring is quite a bit wider than the "O" 
  ring itself, leaving a space inside the groove for water to get into. The 
  "taper" in the groove is on the inside face and it's only a tiny bit, under 5 
  degrees out of plumb. The bottom corners of the groove are supposed to be 
  rounded slightly. The Parker "O" ring "design book" explains the function and 
  has charts for sizes and many different types of applications depending on 
  what the "O" ring is trying to accomplish. There's quite a few different types 
  of groove shapes with some designs based on a rotating shaft, sliding shaft, 
  and a bunch of other applications. The common function of all of them is to 
  apply pressure against the rubber and force it into a TINY crack.
  The "O" ring gets pushed up against the inside groove wall  as the 
  water pressure is applied. The "O" ring doesn't really deform into a slightly 
  rectangular shape until the pressure builds up enough to squash the hatch 
  down. 
  The groove needs to be wide enough to accommodate the "squared" "O" ring 
  and still leave enough space for the water to get in there so the water is 
  applying pressure to the "O" ring, forcing it up against the crack between the 
  two metal surfaces. It's a real simple design and can withstand a LOT of 
  pressure.
  Your rendering shows the taper on the outside groove wall and the rubber 
  "O" ring is filling the groove. That won't seal because there's no where for 
  the water to get in there so it's actually acting like a flat gasket.
  The water would slip under the squared "O" ring because the pressure is 
  being applied to the gap and not "behind" the "O" ring. 
  Frank D.