Just an update for others, I've been in ongoing communications with their customer support. They've had me RMA my original device to them, and the replacement was actually WORSE when I initially connected it. I couldn't even view the PS3 menu screen, without it blanking out every 10-20 seconds. I played with the compatibility settings again, and I was able to stabilize it to where my original device was (blanking out and random intervals, but 10 - 20 MINUTES instead of seconds).
So, one thing that was disappointing me was, I kept telling them, it seemed to be triggered by the activity on screen. The issue is always with the output, no the feed into the elgato (always smooth feed on my laptop). I kept asking, "Do you think it's not getting enough current?", and they would never answer me. I don't know if they were just blowing me off, or they didn't know, but never an answer, so I decided to make a USB adapter, much like what higher current devices use (tablets and external drives). Basically, I wired a second USB male connector in parallel to the cable (only the power), so I could draw current from 2 sources. It seems to have stabilized my device.
I can play for hours, with maybe a slight blip. I still get moments, where it just gets pissy, and still drops out a couple times during a match, but otherwise, very usable. I still had to tweak my compatibility, after attaching the cable, and maybe a few more tweaks would resolve the 'pissy' moments, but I'm going to stick with the settings I have now.
Anyway, I wrote them back, and told them my results. Again, nothing responding to my findings. They 'passed the info to the engineers', then a few days later, asked me to RMA it again. I ask them WTF for, and apparently they made a hardware change they want me to try, so they are actually sending me the device, and having me send mine back when it arrives.
So, the saga continues, but their customer service seems to be working to resolve the real issue still. Hopefully they can come up with something that doesn't required a custom cable, but for now, if anyone has an elgato, and they have a spare USB cable (and know what you're doing), maybe try the cable like I did. I'd love to hear if it works for someone else, or if it's just coincidental that it seemed to (almost) fix my issue.