Well, maybe I'm the only one to try flashing just the BT update off the downloaded SD image. Anyway, I've been living with this for about 1 week. Yesterday, I was updating the ROM firmaware in my phone (HTC HD2), which wiped out all my pairings - and most everything else.
When I re-paired with the AVIC, I immediately noticed an improvement in the quality of streaming audio and MP3s. Sounded like FM radio again - instead of low quality AM. BTW, I never noticed a degradation of hands-free audio. It was only "phone quality" to begin with. I wonder if the two profiles use a different bit-rate.