We report progress on the development of precision binary notch-filter focal plane coronagraphic masks for directly imaging Earth-like planets at visible wavelengths with the Terrestrial Planet Finder Coronagraph (TPF-C), and substellar companions at near infrared wavelengths from the ground with coronagraphs coupled to high-order adaptive optics (AO) systems. Our recent theoretical studies show that 8th-order image masks (Kuchner, Crepp & Ge 2005, KCG05) are capable of achieving unlimited dynamic range in an ideal optical system, while simultaneously remaining relatively insensitive to low-spatial-frequency optical aberrations, such as tip/tilt errors, defocus, coma, astigmatism, etc. These features offer a suite of advantages for the TPF-C by relaxing many control and stability requirements, and can also provide resistance to common practical problems associated with ground-based observations; for example, telescope flexure and low-order errors left uncorrected by the AO system due to wavefront sensor-deformable mirror lag time can leak light at significant levels. Our recent lab experiments show that prototype image masks can generate contrast levels on the order of 2x10-6 at 3 λ/D and 6x10-7 at 10 λ/D without deformable mirror correction using monochromatic light (Crepp et al. 2006), and that this contrast is limited primarily by light scattered by imperfections in the optics and extra diffraction created by mask construction errors. These experiments also indicate that the tilt and defocus sensitivities of high-order masks follow the theoretical predictions of Shaklan and Green 2005. In this paper, we discuss these topics as well as review our progress on developing techniques for fabricating a new series of image masks that are "free-standing", as such construction designs may alleviate some of the (mostly chromatic) problems associated with masks that rely on glass substrates for mechanical support. Finally, results obtained from our AO coronagraph simulations are provided in the last section. In particular, we find that: (i) apodized masks provide deeper contrast than hard-edge masks when the image quality exceeds 80% Strehl ratio (SR), (ii) above 90% SR, 4th-order band-limited masks provide higher off-axis throughput than Gaussian masks when generating comparable contrast levels, and (iii) below ~90% SR, hard-edge masks may be better suited for high contrast imaging, since they are less susceptible to tip/tilt alignment errors.