jmmome,
I have used the foam disk method many times. I have a few observations:
Always use bare extruded styrene sheets [blue or pink foam], not the white, bead-based foam. Extruded is more rigid and cuts cleaner. Blue is typically 1 inch or 1/2 inch, while pink is usually 1 inch or 2 inch in my area. I used the thickest foam available at the time and no thinner than 1 inch.
Regular glues and epoxies don't really stick and some dissolve the foam [like regular fiberglass resin, regular spray adhesive, some spray paints and body filler].
There is a spray adhesive specifically for styrene that won't dissolve it like regular spray adhesive. Regular spray adhesive can be made to work, especially if you are gluing a paper template to each layer [what I do]. If you only spray regular adhesive on the paper and stick it before all the solvent leaves, it does not dissolve very much and will stick. Epoxy sort of works but does not stick well. I have seen no issues with flat foam 'curling' but I saw rather than hot wire.
I work out the angle of the tangent line for each layer and cut that angle into each disk with the corresponding adjusted diameter. Sanding the seams down until they blend with the middle of each layer works very well. I have a sears 3 wheel bandsaw that works very well, the hot wire cutter could work well if it can set an angle reliably, but the paper template would need to be cut to size.
Slitting the disks to get to the center hole works fine as long as the slits don't all line up.
Sanding with coarse paper on a sanding board [glue a half sheet to a flat board with spray adhesive], using a spiraling motion around the body seems to blend the most uniformly [no sanding horizontally or vertically, always diagonally].
I have skinned rockets in epoxy/fiberglass and have left the foam bare with paint [watch out for dissolving the foam], both have worked fine. Fiberglass tends to look lumpier than bare foam for the same amount of foam prep.
I run a phenolic center tube to mechanically locate all the disks, provide a tube to bond fins, provide a straight structure for an internal launch lug/rail button, and to capture the stack of foam so the inter-layer bonds are not critical.
hope this helps,
Tony