I can't duplicate what you describe, i.e. extruded circles, solid subtract from larger, dim change.
Are you perhaps being stymied by display preferences? Go to VWPrefs>Edit>3D conversion res> set to Very High. This will increase the number of display segments, thus making a smoother arc.
As I'm sure you know, CNCs are limited by a similar "resolution" issue, insofar as the positions along an arc are always interpolated from x and y, and thus never really truly an arc.