Thank you whpalmer4, that is a good trick to know.
I got a call back from a helpful support ninja who resolved my issue. She confirmed that the order of projects within a folder should sync in both directions. My guess of what happened is that I added maybe 50 or 100 projects this weekend (someday/maybes from my old system) and somehow the sync stuff got in a funky state.
Anyway, here's the successful fix:
1) On Omnifocus Mac, do File->Rebuild Database. When done, on Omnifocus Mac, click the sync button.
2) Then on Safari on the iPhone (iPod Touch 4g), click on this link:
http://people.omnigroup.com/kc/Debug...dDatabase.html and then click on the "Rebuild OmniFocus Database" link. After another sync, the ordering on iPhone & Mac were consistent and reordering on one device synced to the other.