I know there is going to be some randomness with scheduling, but more times than not, if I click the "Home?" checkbox when trying to schedule a team, I will play them at their place the following season. In my most recent season, all 3 ended up being away games after I checked the "Home?" box.

Am I misunderstanding how it works, or does it need to be flipped?

The game has a "flip" function in it so that home and away changes every year. I think that is colliding with the preferred schedule logic. I'll patch for a future update.