Update: was directed by telephone support to go to the Apple store. Made an appointment at the Genius bar. The associate dismissed the problem as a software issue and told me to hang on to my phone until the problem is addressed during the next iOS update. As "tempting" as that offer was I decided to switch handsets. Was given a factory refurb, which I was none too pleased about and was told that it was not their policy to hand out new phones (I'm in Canada, not sure if U.S. policy is different). Nevertheless, didn't see the point in hanging on to my original faulty phone and figured 4s is new enough that I'm not getting a total dud (hopefully).
Did the following:
-Set the phone up as a new phone and made about 25 test calls - no problems.
-Turned on BT and made another batch of test calls - no problems.
-Paired the phone with stereo BT handset and disconnected phone from headset and made calls with the phone itself - no problems.
-Made calls with the paired BT headset - no problems.
-Paired the phone with iPad and made a batch of test calls - no problems.
-Sync the phone through iTunes but NOT as a back-up restore and made a final batch of test calls - no problems.
Obviously my paranoia of 100+ test calls did not prove this to be a software or hardware problem, but the new phone seems to be working ok. I will repost if anything goes wrong. Best of luck to everyone.