Duane,
I think I'm going to agree with the instructor on this one, but with some reservation.
In the Y14.5M-1994 standard there is a 'similar' example on page 88 figure 5-8 concerning the 'size' of the bolt pattern with location to max material to the basic. I do NOT think its the best use as shown in your drawing, but I think its legal because it would be the same if you had a profile FCF toleranced to the surface and a basic size. It really is a position tolerance to the basic radius. I don't think I would have used such an animal...I would have used a radius basic with a profile of surface. I think the intent is the same as a profile, but since it was a defined circle, the designer used true position. I'm not a designer so I'm just guessing.

Timothy A. Schroeder
Supervisor- CMMs, Gearlab, and Gage Inspection
Rolls-Royce Corporation
P.O. Box 420, Speed Code R29A
Indianapolis, In 46206
Tel: (317)230-5914