Are prefabricated crown molding corners supposed to be "flush"?

The pre-fab corners are made slightly larger so they do protrude beyond the crown molding. This is done to allow for any imperfections in the wall and to give some depth to the molding. Some walls are really screwed up and it would be next to impossible to make anything flush, so that is why they are made that way. Keep going, it will look great when your done, just remember to caulk where moldings hit corners.  more