Some form of traction control makes sense... But when I spin the tires the TC kicks in and lights flash. For this normal acceleration there is no spinning, at all, and no TC light. Could TC still kick in consistently at the same exact RPM if there were a problem with the TC system? has that ever been heard of with these cars?

It definately seems like its something 'intentional' the car is doing, and not mechanical.

But I can consistently give light medium to hard acceleration (not close to tire spinning though) and get the car to cut power at 1800-1900rpm/20mph for about a second.