I found a reasonable answer to my problem. I used raycasting to find the proper Y coordinate, then used the normal to set orientation. I still wish I had a better handle on collision detection, but that's for another day I suppose...

    var hit : RaycastHit;
if(Physics.Raycast(transform.position+Vector3(0,10,0),Vector3(0,-1,0), hit, 20))
{
    transform.position.y = hit.point.y;
    groundNormal = hit.normal;
}

Here, this code should do the trick:

function OnCollisionEnter(collision : Collision) {
    var contact = collision.contacts[0];
    var rot = Quaternion.FromToRotation(Vector3.up, contact.normal);
    transform.rotation = rot;
}

It ensures that your bug's Y will be the same as the Y of the last thing it touched.

If you're using a CharacterController you need to hook into the OnControllerColliderHit. Here's some C#:

using UnityEngine;
using System.Collections;

public class FollowTerrain : MonoBehaviour
{
    public TerrainCollider terrainCollider;

    public void OnControllerColliderHit(ControllerColliderHit hit) {
       if (hit.collider == terrainCollider) {       
           var rot = Quaternion.FromToRotation(Vector3.up, hit.normal);
           transform.rotation = rot;
       }
    }
}