First let me thank Bushmaster for emailing me a response to my question. Great customer service.
Here is the solution to my problem. Removed new Colt bolt and carrier, installed new Bushmaster bolt and carrier. Test fired at range yesterday and not a single malfunction. Dumped 30 round mag's on full-auto all day, or should I say until I ran out of ammo, only brought one battlepack.
I am using a Bushmaster 11.5 inch Heavy Machinegun barrel, Bushie A3 upper, carrier, bolt, and a H buffer.
No drilling of gas port, or any other mods.
Runs great. Rate of fire is significantly slower than my 7.5 inch upper and it is easy to touch of two round bursts. I also like the extra weight of the barrel, helps with control. After I clean everything up I will try and see what the difference is between the two (bolt and carriers) and report back, I suspect that even though the Colt bolt headspaced correctly, it is dimensionally different to cause the bolt to bounce even though it works great in the 7.5 inch upper which has a Colt barrel.