The tendency in a rectangular timber would be to check on the wide face lowering its shear capacity, although this is seldom pushing the limits. The "safer face" in my mind is along the vertical axis of the beam. A built up vertical girder is fine, but you wouldn't under normal conditions stack a bunch of boards and expect to make a stout beam.

I thought about spiral grain but... it is restricted by grade and shouldn't matter to the kerf IF it is within its limits.

Checks follow the grain, spiral or straight. If you see checks it is easy to follow the slope of grain. I imagine with your dotted line of checks you are seeing checks forming around the weakness at rays. I suspect shear is better in interlocked grain but bending is lower...Again all IMO.

Ben B and Firetower have a presenation up at their site.
http://www.ftet.biz/index.php?action=resources.vwp2

Here's another link to the white paper for the engineering geeks:
http://www.ftet.biz/index.php?action=resources.wp01

Vertical check, Mike. Two 4x8s side-by-side: Technically, I think that is as strong as an 8x8, unless they twist and buckle sideways from being too thin. For example, I'd say 8 1x8's side-by-side are not as strong as an 8x8, unless they are attached to each other to keep them from buckling sideways. CB.