I think I have discovered what I was doing wrong and how I can use the custom terrain feature offline.
When making a mission while the Ipad is online it is important to calculate the terrain adjusted waypoints using the custom terrain profile BEFORE saving the mission for later use offline. I had the custom terrain profile correctly selected under the terrain aware tab but I did not run the mission through the custom terrain profile prior to saving the mission. Instead I was attempting to get MPP to calculate the custom terrain profile at the time of uploading the mission to the drone just prior to the flight.