There is no alternate font editor to solve your problem.
What you are seeing is the result of the rigid 1000 UPM-grid inside a font, that allows for points (and also bezier points) to be placed on that grid only.

What you can do now (in descending order of importance):

– Set your points at the extremes of the shape. This minimizes rounding errors. Specially working with circles, that should be fairly easy.
– Do not paste outlines that are too small. This will definitely give you rounding errors, as the points cannot be accommodated on the grid. The AI document should equal the font editor’s settings – e.g. it should measure around 1000×1000 pt. A typical x-height in that document is around 500 pt.
– choose a higher UPM in the font editor, for instance 2000.

In addition to the sound advice shared by Frank, it appears that this particular case is complicated by Illustrator's odd placement of points when it converts the dots to circles— it places four points offset from the extrema, plus an "extra" point at the bottom extreme which is the most to blame for the distortion. Unfortunately, cleaning up such paths is not one of Illustrator's strengths; there's no equivalent to FontLab's "Nodes at Extremes" and no way to remove extra points without distorting the shape. (There is at least one plugin that includes these features— VectorScribe, formally known as BetterHandles.)

The best solution (short of redrawing the circles manually) would probably be to go as large as required in Illustrator to minimize the rounding distortion when pasting to FontLab. Then use FontLab's Optimize feature from the Contours menu to reorient the points, and remove any extras. This might require using a higher UPM, or possibly scaling down the outlines after optimizing (although scaling may also cause rounding errors, you can judge whether the final result meets your desired level of precision).

One additional thought— if all of the circles are identically distorted, it might be possible to use the Find/Replace Shapes feature to replace them with non-distorted circles. See the current thread: http://typophile.com/node/87360

Echoing Gargoyle.
Also, AI has various ways of duplicating paths, so you might want to look into some alternatives that keep the handles straight.

(To me it seems you drew two circles, blended those and then rotated the resulting ‘string of pearls’. A better method would be drawing the start- and end-circles in their final positions, and then applying the blend operation.)

@frankrolf

I think the problem is in the way Illustrator draws the dots for the "dot lines." If the lines themselves are anything other than orthogonal, the circles are draw "perpendicular" to the line: that is, if the line is slanted, the circles will be drawn with extrema orthogonal to the line, but at a slant globally.

So, the problem isn't as you described it, but the solution is: the characters created using the dot line can be used as templates, but the final, exported characters will have to be composed with circles with properly-aligned extrema, using either blend function or align-and-distribute.

@Sensat

David Bergsland's book, Practical Font Design deals extensively with importing glyphs from Illustrator to FontLab.

If this is how you're working, worth the price, I think. Available in PDF, print, and other formats.

I am not David Bergsland's literary agent. ;)

@frankrolf There is no alternate font editor to solve your problem.
There is. Glyphs can deal with floating point coordinates. So you get the exact same shape in the font as you see in Illustrator.

FontForge: Round To Int turned off

UFO, robofab, RoboFont will also work with floating point coordinates. But it is a temporary solution: the grid is not a limitation of the editor but of the font specification. Eventually you have to deal with the resolution. Either by tweaking the curves manually, or by writing some sort of filter, or just relying on the default rounding Glyphs and RoboFont will have to do when exporting.

Georg: Does it help to show perfect outlines in the editor, just to find they have been distorted in the resulting font file? I think that might be even more confusing to the user.

Fontographer 5 deals with floating point co-ordinates.