Thanks for all the help guys!
@fobus; you are totally correct. using DR required me to give each frame a bit more time, so that the slave can catch up; 2 samples was not enough. I raised the pass limit to a minimun of 8. What also helped was lowering the "synchronization interval" in the Distributed Rendering tab; previously it was at 60. My guess is that the slave was too far behind in the passes, so when they got merged together when the frame finished..it only had one pass finished.
@Rawalanche; Yah, I hear ya on that. I just setup backburner and I'll look into that more for animations.
@ihabkal & maru; Thanks guys, I'll make sure that I'm on the most current 1.1 release to get rid of any exsisting issues. One important note I saw in the troubleshooting is to make sure that all slaves have the same max gamma settings. Very useful info
Again, appreciate the help! -Erik