im pretty sure im gonna go with 18" anyway but i was just curious.  when cutting a barrel to 16", does that INCLUDE the threads? or is it just the part that sticks out of the reciever?

BBL length is measured from the boltface (bolt in battery) to the muzzle.

Stay with the 18" barrel, it handles great and you usually don't have any problems with gas pressure the way you do with 16" barrels.

alright, so that means it DOES include the threads and maybe a bit more.  correct?

here's another question:
if i cut my barrel to 16.5" and add a 1.5" brake, do i open gas port for a 16" or 18" setting?

You open it up just far enough to get it to cycle on whichever gas setting you prefer, preferably middle of the road.  It's trial and error but it's easier to make a hole bigger than it is to make one smaller

If what you're asking is "if i cut my barrel to 16" will i have cut off the threads for the flashider?" If so yes, even 18" cuts off the threads with a couple of inchs to spare.  If you go much below 18" its pretty much guaranteed that you will need to drill out the gas port some, you won't be able to get enough adjustment from the regulator to deal with 16".  I had to drill mine out a little and i have an 18" barrel.

If you add a brake you probably won't get the same effect as the equivalent barrel length.  Like seth said you'll just have to see how much you need to drill.  No one can tell you exactly how much you'll need to drill based on your barrel length, there are other factors like how good is your gas system.