Is there a way to delete paired bluetooth phones from the AVIC Z or is doing a Master Reset (and loosing all your songs, settings, backround pics, voice dial names, etc..) the only way?

I can't find any mention of deleting a pairing in the manual

Level 3 and Level 4 reset are the only way.

However, basically, you don't normaly need to delete paired phones... You can pair upto (I think) 5 phones. If you then try to pair additional phones, the first one is automatically deleted, and the new one added etc.

ugh that stinks. how do i do a level 3 or 4 reset? and what are the implications?

Page 175 in the manual. Download the PDF version so you can search for such things in the future.