I may have spoke too soon. Came home after work to do some more testing and yes, after about 10 minutes, even with the USB extension, it started cutting out and doing weird things. Re-seated it and it would go well for another 10. It was starting to drive me crazy. Wondering if I had a bad USB port sot I hooked up my Audioengine D1 and there were some clicks here and there. Tried the DF on my MacMini and it seemed to work OK. Rebooted the MBA and things seemed normal. To make a long story short, I think I had BitPerfect enabled. It really does weird things and I disabled it but programmed a button on my remote to engage it. Deleted BitPerfect from my systems, hooked everything back up and all seems OK for the last half hour or so. No signs of any weirdness.
BTW.. really, really prefer the DragonFly over the Audioengine D1.
I still hold fast that AQ needs to come out with the Dragon Tail.
All seems OK now. Silly User Error