Drew,
I just saw a "how to", on scalloping those frets. I think I saw it on
www.ibanezrules.com under TECH. It's fairly simple, and all you need is a file and a little patience.
I believe the point of scalloping is so that your fingers are not making contact with the wood to give you smoother bends/vibrato. I guess that would translate into a little more sustain, but I don't know if it would be a night & day difference. You know what would help too? A nice polished, smooth fret. Frets tend to get this film of very light corrosion on them when they are not used a lot. If you take some very fine
steel wool, put tape on the fretboard, and steel wool your frets enough to make them shine, it may help. There are other ways of getting those frets as smooth as glass, but they are more involved. Maybe polishing and scalloping would amount to some more sustain.