Followed everyone's suggestions--thank you for providing btw--and then called Apple support as the Geniuses at my Apple store aren't worth my waiting for hours to talk to them. 😉 Spoke with two people on the phone at Apple Support and then they consulted their Sr Advisors. The steps we followed were:
1. do a network reset (General > Reset > Reset Network Settings)
2. do a hard reset (holding power + home until you see the apple logo)
Which I had not done in the past but did while on the call with support today and it seemed to fix the issue for about 5 minutes so they closed the case.
Not sure if it was because I received or made calls in those 5 minutes and added back my wifi too or if that is as long as it takes for it to break again or if it was the network reset that worked or if it was the hard reset that did it.
Anyways, I called back and re-opened the case after I realized it didn't stay fixed and found out the following information:
*The support people said there is no "emerging issue" listed for this issue (which is apparently the list that the engineers work from)
The Apple people I talked to had never even used "pause dialing" and once I explained how it worked and they looked it up on their end they still could not find any information about any issues with it and confirmed two separate times that this issue was NOT on Apple's radar at all.
She said that the Sr Advisor told her that since a hard reset/network settings reset did fix the issue for 5 minutes that a full restore would probably fix it fully. I explained that this was a fresh phone, no restores or anything but she said it still had to be done to see if it helps. I have not tried it yet (going to later) but gave me the following steps:
1 Backup iPhone (iCloud or iTunes)
2 Factory Reset
3 Restore Phone
4 if the problem still exists contact cell provider (Verizon for me) and ask if they have heard about this issue
5 if they have heard of it then call Apple Support back using the apple support case number and tell them what the carrier says so they note it. They told me that at that stage I would get escalated to Sr Advisor's who can provide a replacement phone if necessary.
*They said that no Apple employees are tasked to look at or respond to these or any forums. However, as mentioned a few times in this thread, the www.apple.com/feedback does make some noise via some kind of email format to a department that is supposed to aggregate and escalate issues but they have not done so for this issue yet. So her suggestion was to get this issue made an "emerging issue" and on the list for the engineers to fix, everyone needs to contact Apple Support and explicitly state the issue to a support person, get a case number, follow the steps above, and also provide "feedback" using the aforementioned link by ASPPAgal and some others. Doing all of these steps should provide critical mass and then we can get on that "emerging issues" list for engineers to actually look at and fix. Right now it is NOT on their list according to the Sr Advisors that were spoken to on my behalf today.
I submitted feedback as well as using the https://expresslane.apple.com > iPhone > Calls & Voicemail > Calling voicemail or other phone functions not working as expected > does the product work in another location = no > More Options > Talk to Apple Support Now button, filled in the form and they called me within seconds of clicking the Continue button.
I know we shouldn't have to do this in a perfect world, but if everyone can do these things we might have a faster chance of getting this issue fixed for real. It only takes a few minutes if your experience is anything like mine.